Benjamin Graham wasn’t known for his shareholder letters. Warren Buffett is. Some great CEOs don’t write great letters. And a great shareholder letter doesn’t guarantee great results. All a shareholder letter does is tell investors what the CEO is thinking, not just quarter to quarter, but year to year. Maybe it attracts investors who think in years instead of quarters. I don’t know.
I do know most shareholder letters suck. Here’s one that doesn’t.
This was a difficult year. Our defenses for an uncooperative economy are limited. We can and did lower our payroll expenses taking care not to impair services. We achieved a balance primarily through a reduction in hours worked by hourly employees, salary freezes and the elimination of overtime and bonuses. The dollar reduction was less than hoped for in part due to mandated increases in minimum wage for a substantial number of our employees. Some other costs, such as food, liquor and linen purchases, are variable and reduced in proportion to revenue declines. Percentage rents do reduce with decreased sales but fixed rents are just that, fixed. Other operating expenses did not decline as a category. In fact, this year utilities and insurance premiums remained stubbornly high and legal expenses became significant as we were in litigation on three matters. General and administrative costs decreased marginally.
Most companies use a dozen pages to say in legalese what Michael Weinstein says in one paragraph of plain English.