Our Performance in 1963

1963年度投资表现

1963 was a good year. It was not a good year because we had an overall gain of $3,637,167 or 38.7% on our beginning net assets, pleasant as that experience may be to the pragmatists in our group. Rather it was a good year because our performance was substantially better than that of our fundamental yardstick --the Dow-Jones Industrial Average (hereinafter called the “Dow”). If we had been down 20% and the Dow had been down 30%, this letter would still have begun “1963 was a good year.” Regardless of whether we are plus or minus in a particular year, if we can maintain a satisfactory edge on the Dow over an extended period of time, our long term results will be satisfactory -- financially as well as philosophically.

1963年表现不错。我们说它好并不是因为年底收益达到363.7万美元或者较年初增长了38.7%，对于实用主义者来说，这些数字的确是令人愉悦的。然而，我们的好是因为表现远超年度标杆--道琼斯工业指数。如果我们今年市值缩水20%同时期道指缩水30%，那么信依然会是以“表现不错”来开头。任何特定一年的收益无论正负，只要我们能够保持和道指的相对优势，我们长期的收益绝不会差.

To bring the record up to date, the following summarizes the year-by-year performance of the Dow, the performance of the Partnership before allocation to the general partner, and the limited partners' results for all full years of BPL's and predecessor partnerships' activities:

更新一下数据，下表总结了道指年化收益以及合伙企业在给一般合伙人分红前和分红后的总体收益率：

收益对比

(1) Based on yearly changes in the value of the Dow plus dividends that would have been received through ownership of the Dow during that year.

1. 收益计算基于每年的股价变化并考虑对应的股利发放；

(2) For 1957-61 consists of combined results of all predecessor limited partnerships operating throughout the entire year after all expenses but before distributions to partners or allocations to the general partner.

2. 1957-1961年的数据包含了所有有限合伙人在扣除必要费用后的收益率，但未算入分发给合伙人的资金或者给一般合伙人的分红；

(3) For 1957-61 computed on the basis of the preceding column of partnership results allowing for allocation to the general partner based upon the present partnership agreement.

3. 基于前表的数据且根据当前合伙人协议扣除给一般合伙人配额的部分。

One wag among the limited partners has suggested I add a fourth column showing the results of the general partner --let's just say he, too, has an edge on the Dow.

一位爱开玩笑的有限合伙人提议我应该增加第四栏把一般合伙人的收益也罗列一下。

The following table shows the cumulative or compounded results based on the preceding table:

下表展示的是复合收益率

复合收益率

In a more serious vein, I would like to emphasize that, in my judgment; our 17.7 margin over the Dow shown above is unattainable over any long period of time. A ten percentage point advantage would be a very satisfactory accomplishment and even a much more modest edge would produce impressive gains as will be touched upon later. This view (and it has to be guesswork -- informed or otherwise) carries with it the corollary that we must expect prolonged periods of much narrower margins over the Dow as well as at least occasional years when our record will be inferior (perhaps substantially so) to the Dow.

依据我的判断，我们这种能够超越道指17.7%的表现是无法长期维持的。超越10个点足以让人满意，即便是更少的优势也能产生令人惊艳的收益。这种观点（它必须是猜测——知情或以其他方式）伴随着的必然结果，即我们必须预期超越道琼斯指数的利润率长期来看会变窄，并且至少偶尔会有几年我们的记录比道琼斯指数更差（有可能远不如道指）。

Investment Companies

其他投资公司

We regularly compare our results with the two largest open-end investment companies (mutual funds) that follow a policy of being, typically, 95 -100% invested in common stocks, and the two largest diversified closed- end investment companies. These four companies, Massachusetts Investors Trust, Investors Stock Fund, Tri- Continental Corp. and Lehman Corp. manage about 25 billion investment company industry. My opinion is that their results roughly parallel those of the vast majority or other investment advisory organizations which handle, in aggregate, vastly greater sums.

我们通常会把投资收益和两家最大的开放式投资公司（95%-100%的资产都投资于股票市场），和两家封闭式投资公司做比较。这四家公司分别是Massachusetts Investors Trust, Investors Stock Fund, Tri- Continental Corp. 和 Lehman Corp. 总计管理了大约40亿美元的资产，并能很好地代表当前总资产为250亿美元的投资信托产业。我的观点是他们的投资表现应该与其他投资公司一致

The purpose or this tabulation, which is shown below, is to illustrate that the Dow is no pushover as an index or investment achievement. The advisory talent managing just the four companies shown commands' annual fees of over $7 million, and this represents a very small fraction of the industry. The public batting average of this highly-paid talent indicates they achieved results slightly less favorable than the Dow.

罗列下表的目的是为了告诉大家道琼斯指数并不是一个容易超越的指标。这四家公司聪明绝顶的投资顾问每年的咨询费高达700万美元，这也只是整个行业的冰山一角。这些高薪人才的投资表现也只能略逊于道指。

Both our portfolio and method of operation differ substantially from the investment companies in the table. However, most partners, as an alternative to their interest in the Partnership would probably have their funds invested in media producing results comparable with investment companies, and I, therefore, feel they offer a meaningful standard of performance.

我们的投资组合或是运作方式都和这些投资公司大相径庭。但是，大多数合伙人处于投资多样性的考虑会把他们的一部分资金投资于媒体遴选出的投资公司，我认为他们是个很不错的对比标尺。

年化收益

复合收益

The Dow, of course, is an unmanaged index, and it may seem strange to the reader to contemplate the high priests of Wall Street striving vainly to surpass or even equal it. However, this is demonstrably the case. Moreover, such a failure cannot be rationalized by the assumption that the investment companies et al are handling themselves in a more conservative manner than the Dow. As the table above indicates, and as more extensive studies bear out, the behavior of common stock portfolio managed by this group, on average, have declined in concert with the Dow. By such a test of behavior in declining markets, our own methods of operation have proven to be considerably more conservative than the common stock component of the investment company or investment advisor group. While this has been true in the past, there obviously can be no guarantees about the future.

道琼斯指数，一个显然无人管理的指数到底缘何让各位华尔街的精英们费劲心思也无法超过甚至收益与之相近。即便原因不止，结果也是显而易见的。此外，这种失败并不能归咎于投资公司使用了比道琼斯指数更加保守的投资策略。上表体现出在熊市，各个投资公司的收益和道指一样下跌，程度更甚。在熊市下跌程度的测试可以体现出我们的投资策略是要比道指和其他投资公司更加保守。不过这只代表过去，未来可是未知的。

The above may seem like rather strong medicine, but it is offered as a factual presentation and in no way as criticism. Within their institutional framework and handling the many billions of dollars involved, the results achieved are the only ones attainable. To behave unconventionally within this framework is extremely difficult. Therefore, the collective record of such investment media is necessarily tied to the record of corporate America. Their merits, except in the unusual case, do not lie in superior results or greater resistance to decline in value. Rather, I feel they earn their keep by the ease of handling, the freedom from decision making and the automatic diversification they provide, plus, perhaps most important, the insulation afforded from temptation to practice patently inferior techniques which seem to entice so many world-be investors.

以上的结论似乎令人吃惊但也毫无争辩的事实。在我看来那些管理着巨量资金的庞大投资机构，这种收益率似乎已经是最好的结果了。在他们公司的框架下要做什么出格的事情是十分困难的。因此媒体所展示的各种投资公司组合实际上适合美国整体公司的情况紧密联系的。除非是特殊情况，他们的价值不是在于超额收益或者抗通胀。在我看来，他们的价值体现在为大众提供了一个方便，自由的，多样化的投资途径，并提供有效阻止了一些投资新手来股票市场试水。

The Joys of Compounding

复利的魔力

Now to the pulse-quickening portion of our essay. Last year, in order to drive home the point on compounding, I took a pot shot at Queen Isabella and her financial advisors. You will remember they were euchred into such an obviously low-compound situation as the discovery of a new hemisphere.

言归正传，去年为了更形象地展示复利的魔力，我拿伊丽莎白女王和她经济顾问举例。各位应该还记得他们在发现新大陆至今整体的复合收益率是有多低。

Since the whole subject of compounding has such a crass ring to it, I will attempt to introduce a little class into this discussion by turning to the art world. Francis I of France paid 4,000 ecus in 1540 for Leonardo da Vinci’s Mona Lisa. On the off chance that a few of you have not kept track of the fluctuations of the ecu 4,000 converted out to about $20,000.

关于复利的讨论是如此粗俗，那么我们就来谈谈艺术界的事吧。1540 年，法国的弗朗西斯一世为达芬奇的蒙娜丽莎支付了 4,000 埃库。 有些人大概没有注意到当时 4,000 埃库相当于大约 20,000 美元。

If Francis had kept his feet on the ground and he (and his trustees) had been able to find a 6% after-tax investment, the estate now would be worth something over 1,000,000,000,000,000.00. That's $1 quadrillion or over 3,000 times the present national debt, all from 6%. I trust this will end all discussion in our household about any purchase or paintings qualifying as an investment.

如果弗朗西斯一世留住这部分钱，然后找个税后有6%收益的投资项目，那么到现在的收益应该是有 $1,000,000,000,000,000.00。这将近是有当前美国国债的3000倍的资金，还仅仅是只有6%的收益率。我相信这个统计应该能够终结投资艺术品是否是个好的投资的争论了。

However, as I pointed out last year, there are other morals to be drawn here. One is the wisdom of living a long time. The other impressive factor is the swing produced by relatively small changes in the rate of compound.

然而，正如我去年所指出的那样，这其中还有一些其他的事情需要注意。第一就是要活的够长；另一个关键点就是收益率的些许波动对最终结果的影响。

Below are shown the gains from $100,000 compounded at various rates:

下面就是10万美刀在不同复合收益率下的结果：

不同收益率对比

It is obvious that a variation of merely a few percentage points has an enormous effect on the success of a compounding (investment) program. It is also obvious that this effect mushrooms as the period lengthens. If, over a meaningful period of time, Buffett Partnership can achieve an edge of even a modest number of percentage points over the major investment media, its function will be fulfilled.

很明显收益率些许的变化对复合收益率的结果将天差地别。而且随着时间的增长，这种影响将会越来越大。如果巴菲特合伙公司在长期能够保持合理的超越主流投资公司的收益，这个效果将会显现出来。

Some of you may be downcast because I have not included in the above table the rate of 22.3% mentioned on page 3. This rate, of course, is before income taxes which are paid directly by you --not the Partnership. Even excluding this factor, such a calculation would only prove the absurdity of the idea of compounding at very high rates -- even with initially modest sums. My opinion is that the Dow is quite unlikely to compound for any important length of time at the rate it has during the past seven years and, as mentioned earlier, I believe our margin over the Dow cannot be maintained at its level to date. The product of these assumptions would be a materially lower average rate of compound for BPL in the future than the rate achieved to date. Injecting a minus 30% year (which is going to happen from time to time) into our tabulation of actual results to date, with, say, a corresponding minus 40% for the Dow brings both the figures on the Dow and BPL more in line with longer range possibilities. As the compounding table above suggests, such a lowered rate can still provide highly satisfactory long term investment results.

也许有些人会因为我没有将第三页提到的22.3%的收益率算一遍感到失望。这个收益率是税前金额。即便不考虑税务因素，计算出的结果只能证明以很高的比率（收益率）来计算复利是荒谬的，即便初始金额不高。我的想法是道琼斯指数不会像过去七年那样有如此高的收益率，我们的合伙企业也很难维持相对道指这样的超额收益。以上的假设意味着将来BPL的复合收益率将会低于当前所取得的结果。如果将30%的回撤（其实会时不时地发生）考虑进去，道指相应地有40%的回撤，这会使合伙公司的道指的收益预期更加符合实际。即便如此，低复合收益率仍然能带来可喜的收益。

Our Method of Operation

我们的运营方法

At this point I always develop literary schizophrenia. On the one hand, I know that we have in the audience a number of partners to whom details of our business are interesting. We also have a number to whom this whole thing is Greek and who undoubtedly wish I would quit writing and get back to work.

写到这里我就有点分裂了，一方面有的观众对我们的运作很感兴趣，也有一部分合伙人希望我少说多做。

To placate both camps, I am just going to sketch briefly our three categories at this point and those who are interested in getting their doctorate can refer to the appendix for extended treatment of examples.

为了兼顾各方，在正文中我将对三个类别的投资简要概述，对细节感兴趣的读者请参阅附录。

Our three investment categories are not differentiated by their expected profitability over an extended period of time. We are hopeful that they will each, over a ten or fifteen year period, produce something like the ten percentage point margin over the Dow that is our goal. However, in a given year they will have violently different behavior characteristics, depending primarily on the type of year it turns out to be for the stock market generally. Briefly this is how they shape up:

这三类投资并非根据对其的预期收益率来分类。我们的目标是它们在10-15年的时间里都能完成超过道指10%的收益。同时在任意一年各自的收益率都有所不同，很大程度上取决于当年整体股票市场的情况。下面就是他们分类方法：

“Generals” - A category of generally undervalued stocks, determined primarily by quantitative standards, but with considerable attention also paid to the qualitative factor. There is often little or nothing to indicate immediate market improvement. The issues lack glamour or market sponsorship. Their main qualification is a bargain price; that is, an overall valuation on the enterprise substantially below what careful analysis indicates its value to a private owner to be. Again let me emphasize that while the quantitative comes first and is essential, the qualitative is important. We like good management - we like a decent industry - we like a certain amount of “ferment” in a previously dormant management or stockholder group. But we demand value. The general group behaves very much in sympathy with the Dow and will turn in a big minus result during a year of substantial decline by the Dow. Contrary wise, it should be the star performer in a strongly advancing market. Over the years we expect it, of course, to achieve a satisfactory margin over the Dow.

"股票投资" -- 这类投资主要是很多被低估的股票，主要是依据定量的研究，不过同时也会很注重定性分析。往往这些股票没有涨的迹象。同时也是被市场忽略的股票。他们的主要优势在于便宜的股价，即当前股价所代表的市值是远远小于公司内在价值的。但是请各位牢记，尽管定量分析很关键，定性分析也十分重要。我们喜欢好的管理层，不错的行业，也喜欢在目前近乎休眠的管理层或者股东中有些活跃分子。但是其中的价值是我们最关注的。这部分股票投资的收益曲线和道指十分相似，在熊市的时候他们的收益也会很差。相反的，在大牛市里他们一定独领风骚。不过长期我们一定希望这部分投资会领先道指。

“Workouts” - These are the securities with a timetable. They arise from corporate activity - sell-outs, mergers, reorganizations, spin-offs, etc. In this category we are not talking about rumors or "inside information" pertaining to such developments, but to publicly announced activities of this sort. We wait until we can read it in the paper. The risk pertains not primarily to general market behavior (although that is sometimes tied in to a degree), but instead to something upsetting the applecart so that the expected development does not materialize. Such killjoys could include anti-trust or other negative government action, stockholder disapproval, withholding of tax rulings, etc. The gross profits in many workouts appear quite small. A friend refers to this as getting the last nickel after the other fellow has made the first ninety-five cents. However, the predictability coupled with a short holding period produces quite decent annual rates of return. This category produces more steady absolute profits from year to year than generals do. In years of market decline, it piles up a big edge for us; during bull markets, it is a drag on performance. On a long term basis, I expect it to achieve the same sort of margin over the Dow attained by generals.

“套利投资” -- 这些股票的投资是按照时间表来操作的。他们起源于一系列公司层面的操作：出售、合并、重组、分拆等等。这类投资并不依赖于那种小道消息，而是根据公开发布的信息。我们等到可以在公开资料上看到这些消息后再出手。这类投资的风险不在于市场行为（尽管有时市场的反应会有一定影响），相反往往是政策原因让这些案子最终搁浅。此类叫停原因可能包括反垄断或其他负面政府行为、股东反对、扣缴税收裁决等。大多数套利投资的利润看起来都很少。一个朋友如此形容套利操作：在别人拿走95%利润后，去努力拿那最后5%。不过，套利的确定性和短期效应可以让年化收益也很可观。这类投资可以比第一类股票投资提供更加稳定的年化收益率。在熊市期间，它撑起是我们收益的主要来源；但在牛市中，却会对投资表现有所拖累。长期来看，我希望这类投资能收益能和股票类投资收益率持平。

“Controls” - These are rarities, but when they occur they are likely to be of significant size. Unless we start off with the purchase of a sizable block or stock, controls develop from the general category. They result from situations where a cheap security does nothing price-wise for such an extended period of time that we are able to buy a significant percentage of the company's stock. At that point we are probably in a position to assume some degree of, or perhaps complete, control of the company's activities; whether we become active or remain relatively passive at this point depends upon our assessment of the company’s future and the management's capabilities. The general we have been buying the most aggressively in recent months possesses excellent management following policies that appear to make very good sense to us. If our continued buying puts us in a controlling position at some point in the future, we will probably remain very passive regarding the operation or this business.

“控股公司“ -- 这类投资不多，但是每笔投资都会占用大量资金。一半我们是从购买部分股权开始，控股公司往往是从股票投资类别转化过来。往往是这些低廉便宜的股票价格长期维持低位，最终我们能够在这个价位把公司股票大部分都收入囊中。待到那时，我们就处于能够左右或者完全控制公司运营的位置，那么我们是否积极参与公司管理或者依然保持沉默取决于我们对这家公司未来和当前管理层的评估。我们这几个月大举购入的公司管理层十分优秀。如果我们对这家公司持续买入，不久将来我们就会达到控制的比例。但是很可能我们对这家公司的运营不会干预。

We do not want to get active merely for the sake of being active. Everything else being equal I would much rather let others do the work. However, when an active role is necessary to optimize the employment of capital you can be sure we will not be standing in the wings.

不会只是为了参与而参与。如果别人能做的和我一样，我宁愿让别人代劳。当然，如果积极参与公司管理能让我们得到更好的回报，我们不会袖手旁观的。

Active or passive, in a control situation there should be a built-in profit. The sine qua non of this operation is an attractive purchase price. Once control is achieved, the value of our investment is determined by the value of the enterprise, not the oftentimes irrationalities of the marketplace.

无论主动参与或者被动等待，在控股有限公司中其内在的利润已经确定。这种控股投资的行为内在价值来源于购入的价格。一旦达到控股的比例，那么我们这笔投资的利润就取决于公司的价值，而非市场给的定价了。

Our willingness and financial ability to assume a controlling position gives us two-way stretch on many purchases in our group of generals. If the market changes its opinion for the better, the security will advance in price. If it doesn't, we will continue to acquire stock until we can look to the business itself rather than the market for vindication of our judgment.

这种既拥有经济能力又有意愿来控制公司的能力让我们在购买很多低估股票时有很多选择余地。如果市场在我们购买过程中改变想法给其很高的定价，我们就售出获利。如果不是，我们将会继续购买股票直到我们可以自己控制而不是期待市场的修正。

Investment results in the control category have to be measured on the basis of at least several years. Proper buying takes time. If needed, strengthening management, re-directing the utilization of capital, perhaps effecting a satisfactory sale or merger, etc., are also all factors that make this a business to be measured in years rather than months. For this reason, in controls, we are looking for wide margins of profit-if it looks at all close, we pass.

最终达到控股公司级别的投资至少需要过几年才能实现。很多次的买入，可能需要强化的管理层，优化资金流向，促成让人满意的出售或者并购等等，所有这些都需要以年为单位计。因此，对这类投资我们希望有不错的利润率，如果预期收益只是和其他的投资类别相似，我们就不会去执行。

Controls in the buying stage move largely in sympathy with the Dow. In the later stages their behavior is geared more to that of workouts.

控股类别的投资在早期的收益率很大程度上和道指相似，不过在后期的操作更像是套利所涉及的范畴。

As I have mentioned in the past, the division of our portfolio among the three categories is largely determined by the accident or availability. Therefore, in a minus year for the Dow, whether we are primarily in generals or workouts is largely a matter of luck, but it will have a great deal to do with our performance relative to the Dow. This is one or many reasons why a single year's performance is of minor importance and, good or bad, should never be taken too seriously.

正如我之前提到的，这三类投资类别的比率很大程度取决于是否有好的投资标的。因此，在道指下跌的某一年，我们主要的资金是放在股票市场还是套利中完全运气，但是我们当年相对于道指的投资表现却决定于此。这也是为什么我们不要太在意某一年的收益率的好坏，因为真的不重要。

If there is any trend as our assets grow, I would expect it to be toward controls which heretofore have been our smallest category. I may be wrong in this expectation - a great deal depends, of course, on the future behavior of the market on which your guess is as good as mine (I have none). At this writing, we have a majority of our capital in generals, workouts rank second, and controls are third.

随着我们资产的增加，我可以预测的是我们第三类投资的比例会提高。也许我的估计是错的，不过这取决于整体市场的行为。在预测市场方面各位和我不相伯仲，我完全无力预测市场。在写这篇文章时，我们大部分投资都在股票市场，套利排第二，控股公司为末位。

Miscellaneous

杂项

We are starting off the year with net assets of 17,454,900. Our rapid increase in assets always raises the question of whether this will result in a dilution of future performance. To date, there is more of a positive than inverse correlation between size of the Partnership and its margin over the Dow. This should not be taken seriously however. Larger sums may be an advantage at some times and a disadvantage at others. My opinion is that our present portfolio could not be improved if our assets were 1 million or 5 million. Our idea inventory has always seemed to be 10% ahead of our bank account. If that should change, you can count on hearing from me.

我们今年年初净资产达到1745.49万美元。资产的快速增长是否对未来投资表现有负面影响？截止目前，正面的影响要大于负面。因此不需要过多担心。大规模的资金有时候是好事有时候是坏事。我的观点是如果资产只有100万或者500万，是无法改善目前的投资组合的。我们理想的收益率应该在高于银行收益的10%。如果情况有变，我一定会写信给大家

Susie and I have an investment of 2,392,900 in the Partnership. For the first time I had to withdraw funds in addition to my monthly payments, but it was a choice of this or disappointing the Internal Revenue Service. Susie and I have a few non-marketable (less than 300 holders) securities of nominal size left over from earlier years which in aggregate are worth perhaps 1% of our partnership interest. In addition we have one non- marketable holding of more material size of a local company purchased in 1960 which we expect to hold indefinitely. Aside from this all our eggs are in the BPL basket and they will continue to be. I can't promise results but I can promise a common destiny. In addition, that endless stream of relatives of mine consisting of my three children, mother, father, two sisters, two brothers-in-law, father-in-law, four aunts four cousins and five nieces and nephews, have interests in BPL directly or indirectly totaling $1,247,190.

Susie 和我在合伙公司总共有239.29万美元的投资。除了每个月的工资外我第一次必须从合伙公司中提取资金，不过这个选择也许会让国税局失望？。Susie和我名义上拥有一些早年获得的非流通股票资产（股东不超过300位）价值不超过在合伙公司资产的1%。除此之外，我们还有在1960年购入的一些当地公司的不可出售的有形资产。这些资产我们准备永久拥有。我们其余所有的资产都投入在了合伙公司。而且我们还有无数的亲戚在合伙公司中拥有股份，他们的份额总计达到124.719万美元。

Bill Scott is also in with both feet, having an interest along with his wife or $237,400, the large majority or their net worth. Bill has done an excellent job and on several or our more interesting situations going into 1964, he has done the majority or the contact work. I have also shoved off on him as much as possible of the administrative work so if you need anything done or have any questions, don't hesitate to ask for Bill if I'm not around.

Bill Scott 的主要资产都在合伙公司，他和他的妻子总共拥有23.74万美元的份额。他的工作完成的很出色，在1964年他将主要负责接待，我也尽量委任他管理的任务，所以各位如果有任何疑问而我碰巧不在，请联系他。

Beth and Donna have kept an increasing work load flowing in an excellent manner. During December and January, I am sure they wish they had found employment elsewhere, but they always manage to keep a mountain of work ship-shape.

Beth 和 Donna 总是能在越来越多工作中显得游刃有余。我打赌12月和1月份的大量的任务一定会使她们产生辞职的想法，不过她们总是能顺利完成。

Peat, Marwick, Mitchell has done their usual excellent job of meeting a tough timetable. We have instructed them to conduct two surprise checks a year (rather than one as in past years) on our securities, cash, etc., in the future. These are relatively inexpensive, and I think make a good deal of sense in any financial organization.

Peat, Marwick, Mitchell 一如既往地准时完成苛刻的任务。今年委托他们对我们的股票现金进行两次抽检 （前几年只进行一次）。这种抽检价格不贵，而且我认为在任何金融机构需要做这种检查。

Let me know if anything needs clarifying. As we grow, there is more chance of missing letters, a name skipped over, a figure transposition, etc., so speak up if it appears we might have erred. Our next letter will be about July 15th summarizing the first half.

随着我们规模的成长，出现遗漏字母、跳过名称、图形错位等错位的可能性越来越大，所以如果我们可能犯了错误，请及时指出。下一封信将在7月15日寄出，总结我们上半年的表现。

Cordially, Warren E. Buffett

Appendix

附录

TEXAS NATIONAL PETROLEUM

德州国家石油

This situation was a run-of-the-mill workout arising from the number one source of workouts in recent years -- the sellouts of oil and gas producing companies.

这类石油天然气公司的整体出售案是近年来套利的主要来源。

TNP was a relatively small producer with which I had been vaguely familiar for years.

TNP是一家相对小一点的公司，很多年前我曾略微关注过。

Early in 1962 I heard rumors regarding a sellout to Union Oil of California. I never act on such information, but in this case it was correct and substantially more money would have been made if we had gone in at the rumor stage rather than the announced stage. However, that's somebody else's business, not mine.

早在1962年我就听小道消息说它会整体出售给加利福尼亚联合石油公司。这种小道消息我从不会给予回应，但是这个谣言目前证明是真的，而且如果在当初我们采取行动而不是在消息公示之后，赚到的钱会比现在多很多，但这不是我们做事的方法。

In early April, 1962, the general terms of the deal were announced. TNP had three classes of securities outstanding:

在1962年四月初，交易细节被公开。TNP 拥有三类已发行证券：

(1) 6 1/2% debentures callable at 104 1/4 which would bear interest until the sale transpired and at that time would be called. There were 6.5 million outstanding of which we purchased $264,000 principal amount before the sale closed.

1. 6.5% 计息的公司债券将会在104.25的价格赎回，收购发生前将继续派息，收购之日将会被赎回。该类债券有650万美元在外流通，我们在赎回之日前购买了26.4万美元。

(2) About 3.7 million shares of common stock of which the officers and directors owned about 40%. The proxy statement estimated the proceeds from the liquidation would produce $7.42 per share. We purchased 64,035 shares during the six months or so between announcement and closing.

2. 大约有370万的流通股，公司职员和管理层持有40%的股份。委托书估计清算后每股股价在7.42美元。我们在公告之日起到收购日期间购买了64,035股.

(3) 650,000 warrants to purchase common stock at 7.42 for the workout on the common resulted in $3.92 as a workout on the warrants. We were able to buy 83,200 warrants or about 13% of the entire issue in six months.

3. 650,000 份认股权证可以以每股 3.50 美元的价格购买普通股。 依据委托书估计的每股7.42 美元，那么对该权证每股套利将获利3.92 美元。 我们在六个月内购买 83,200 份认股权证，约占整个发行量的 13%。

The risk of stockholder disapproval was nil. The deal was negotiated by the controlling stockholders, and the price was a good one. Any transaction such as this is subject to title searches, legal opinions, etc., but this risk could also be appraised at virtually nil. There were no anti-trust problems. This absence of legal or anti-trust problems is not always the case, by any means.

股东反对的风险为零。该笔并购是控股股东促成的，而且收购价很不错。任何此类交易都需要进行产权搜索、法律意见等，但这种风险也可以评估为几乎为零。 不存在反垄断问题。 但是无论如何，这种没有法律或反垄断问题的并购案并非总能遇到。

The only fly in the ointment was the obtaining of the necessary tax ruling. Union Oil was using a standard ABC production payment method of financing. The University of Southern California was the production payment holder and there was some delay because of their eleemosynary status.

唯一美中不足的就是需要必要的税收裁定。联合石油的财务时使用标准的ABC 生产企业的付款方式。南加利福利亚大学是付款方，因此根据其董事会的资金状况会造成付款的延迟。

This posed a new problem for the Internal Revenue Service, but we understood USC was willing to waive this status which still left them with a satisfactory profit after they borrowed all the money from a bank. While getting this ironed out created delay, it did not threaten the deal.

这给国税局带来了新的问题，但我们认为 USC 愿意跳过这个状态，因为即便在从银行借钱仍能获得令人满意的利润。 虽然解决这个问题会造成延误，但并没有威胁到这笔交易。

When we talked with the company on April 23rd and 24th, their estimate was that the closing would take place in August or September. The proxy material was mailed May 9th and stated the sale "will be consummated during the summer of 1962 and that within a few months thereafter the greater part of the proceeds will be distributed to stockholders in liquidation.” As mentioned earlier, the estimate was $7.42 per share.

当我们和公司在4月23/24号交涉的时候，他们估计这笔交易应该在八九月份可以结束。公开声明在五月九日发表，其中讲到交易会在1962年夏完成，并在随后的几个月把现金发放到股东手里。正如之前所说，估计每股7.42 美元。

Bill Scott attended the stockholders meeting in Houston on May 29th where it was stated they still expected to close on September 1st.

Bill Scott 在5月29日出席了股东大会，会上提到交易会在9月1日结束。

The following are excerpts from some of the telephone conversations we had with company officials in ensuing months:

下面就是我们随后几个月和公司之间的沟通内容：

On June 18th the secretary stated "Union has been told a favorable IRS ruling has been formulated but must be passed on by additional IRS people. Still hoping for ruling in July.”

6.18. 董秘称：工会被告知一项有利的 IRS 裁决被制定提交，但必须由其他 IRS 人员通过。 仍然希望在七月作出裁决。

On July 24th the president said that he expected the IRS ruling “early next week.”

7.24. 执行长称IRS 裁决将在下周早期作出。

On August 13th the treasurer informed us that the TNP, Union Oil, and USC people were all in Washington attempting to thrash out a ruling.

8.13. 财务主管告诉我们，TNP、联合石油公司和南加州大学的人都在华盛顿试图推翻一项裁决。

On September 18th the treasurer informed us "No news, although the IRS says the ruling could be ready by next week.”

在9月18日，财务主管告诉我们没有新消息，即便IRS说他们下周裁决会ready。

The estimate on payout was still $7.42.

预计仍将支付每股7.42美元。

The ruling was received in late September, and the sale closed October 31st. Our bonds were called November 13th. We converted our warrants to common stock shortly thereafter and received payments on the common of 3.90 February 4, 1963, and 15 cent on April 24, 1963. We will probably get another 4 cent in a year or two. On 147,235 shares (after exercise of warrants) even 4 cent per share is meaningful.

裁决在九月底正式作出，并购在十月三十一号完成。我们的的债券在10月31日被赎回。之后不久我们就讲权证转换成普通股。1962年12月14日收到每股3.5美元，1963年2月4日收到每股3.9美元，1963年4月24日收到15美分。很可能在未来一两年收到最后的5美分。对于147,235 份股票来说即便是每股4美分也值不少钱。

This illustrates the usual pattern: (1) the deals take longer than originally projected; and (2) the payouts tend to average a little better than estimates. With TNP it took a couple of extra months, and we received a couple of extra percent.

这也侧面反应了一个通常的情况，并购案拖的时间越长，越有可能比预期获得更好的收益。TNP案子比预想的更久，不过我们也多了几个点的收益。

The financial results of TNP were as follows:

TNP 投资收益如下：

(1) On the bonds we invested 260,773 and had an average holding period of slightly under five months. We received 6 1⁄2% interest on our money and realized a capital gain of 14,446. This works out to an overall rate of return of approximately 20% per annum.

1. 债券投资投入资金260773， 平均持有时间略低于5个月。我们这段时间我们收到了6.5% 的利息，实现利润14，446美元。这笔套利年化收益达到20%。 （怎么算的，不同的资金投入时间不同？？）

(2) On the stock and warrants we have realized capital gain of 89,304, and we have stubs presently valued at 2,946. From an investment or 146,000 in April, our holdings ran to 731,000 in October. Based on the time the money was employed, the rate or return was about 22% per annum.

2. 在股票和权证的实现盈利89304，目前还有大约2946美元的剩余股份。从四月的第一笔146000美元的投资到十月总计投入731000. 根据资金投入时间来推算，年化收益率大约在22%。

In both cases, the return is computed on an all equity investment. I definitely feel some borrowed money is warranted against a portfolio of workouts, but feel it is a very dangerous practice against generals.

上面两种情形的回报都是根据股权投资计算的。我真心觉得借钱投资这类收益保底的套利是可行的，但投资在股票上就太危险了。

We are not presenting TNP as any earth-shaking triumph. We have had workouts which were much better and some which were poorer. It is typical of our bread-and-butter type of operation. We attempt to obtain all facts possible, continue to keep abreast of developments and evaluate all of this in terms of our experience. We certainly don't go into all the deals that come along -- there is considerable variation in their attractiveness. When a workout falls through, the resulting market value shrink is substantial. Therefore, you cannot afford many errors, although we fully realize we are going to have them occasionally.

其实TNP的案子是没什么了不起。我们有的套利操作收益更高，也有的收益要差。不过这就是我们典型的套利运作方法。我们尽可能获取全面且确定的信息，持续跟进，并依据我们的经验来评估当前是形势。我们当然不能全程跟踪所有的案子，这其中肯定会根据不同情况进行取舍。当套利失败时，会造成市值大幅度缩水。因此，尽管常在河边走难免不湿鞋，但是我们还是希望尽量不犯错。

DEMPSTER MILL MFG.

DEMPSTER MILL 制造

This situation started as a general in 1956. At that time the stock was selling at 18 with about 72 in book value of which $50 per share was in current assets (Cash, receivables and inventory) less all liabilities. Dempster had earned good money in the past but was only breaking even currently.

这笔交易起源于1956年。当时股价是18美元， 而账面价值大约72美元。其中50美元为减去负债后的流动资产（现金，应收和库存）。Dempster 在过去赚了很多钱但目前仅维持收支平衡。

The qualitative situation was on the negative side (a fairly tough industry and unimpressive management), but the figures were extremely attractive. Experience shows you can buy 100 situations like this and have perhaps 70 or 80 work out to reasonable profits in one to three years. Just why any particular one should do so is hard to say at the time of purchase, but the group expectancy is favorable, whether the impetus is from an improved industry situation, a takeover offer, a change in investor psychology, etc.

定性来看，当时的情形是不容乐观的（所在行业竞争激烈，管理层也不行），但是账面算出的利润让人动心。经验告诉我这比套利在一到三年类应该有7-8成概率获得不错的利润。很难说当时是什么具体原因出手购入，但是整体预期是向上的，无论推动力是来自于市场环境变好，并购案或者投资者预期变化，等等。

We continued to buy the stock in small quantities for five years. During most or this period I was a director and was becoming consistently less impressed with the earnings prospects under existing management. However, I also became more familiar with the assets and operations and my evaluation of the quantitative factors remained very favorable.

我们连续五年持续地小部分购买股份。在这期间我都担任公司董事，并渐渐对当前管理层盈利能力不满意。然而，我也借此能熟悉公司的资产和运营，并且定量分析的结果表明收益率仍然令人心动。

By mid-1961 we owned about 30% or Dempster (we had made several tender offers with poor results), but in August and September 1961 made, several large purchases at 16-$25 range.

到了1961年，我们总共占有Dempster 股权的30%（曾经多次邀约收购股份都结果不佳），不过在1961年九月，以30.25美元购入了大量股权，并促成了之后相同价格的要约收购，从而占股比例达到了70%。我们过去5年的购入价格在16-25美元。

On assuming control, we elevated the executive vice president to president to see what he would do unfettered by the previous policies. The results were unsatisfactory and on April 23, 1962 we hired Harry Bottle as president.

在接管控制权后，我们将执行副总裁提升为总裁，看看他不受以前政策的约束情况下表现如何。 结果并不令人满意，1962 年 4 月 23 日，我们聘请了 Harry Bottle 担任总裁。

Harry was the perfect man for the job. I have recited his triumphs before and the accompanying comparative balance sheets speak louder than any words in demonstrating the re-employment of capital.

Harry完美地完成了他的工作。我曾经颂扬过他的事迹，不过附上资产负债表可以更加说明他在重组公司的能力是多么惊人。

61-63年资产负债表对比

Harry:

(1) took the inventory from over 1 million reducing carrying costs and obsolescence risks tremendously;

1. 将400万美元的库存降为100万美元，大幅缩减了维护成本和淘汰风险；

(2) correspondingly freed up capital for marketable security purchases from which we gained over $400,000

2. 将相应的资金投资于可证券市场让我们赚了40万美金

(3) cut administration and selling expense from 75,000 per month;

3. 缩减管理和销售费用，从每月15万降到7.5万美元。

(4) cut factory overhead burden from 4.50 per direct labor hour;

4. 将工厂管理直接工时费从6 美元减少到 4.50 美元；

(5) closed the five branches operating unprofitably (leaving us with three good ones) and replaced them with more productive distributors;

5. 关闭了5个不赚钱的分销商（只留下三个还不错的），同时请来了更高效的分销商；

(6) cleaned up a headache at an auxiliary factory operation at Columbus, Nebraska;

6. 解决了内布拉斯加州哥伦布的一家辅助工厂运营中一个令人头疼的问题；

(7) eliminated jobbed lines tying up considerable money (which could be used profitably in securities) while producing no profits;

7. 消除了占用大量资金而没有利润的生产线（并投资在有利润的证券上）；

(8) adjusted prices of repair parts, thereby producing an estimated $200,000 additional profit with virtually no loss of volume; and most important;

8. 调整维修零件的价格，从而在几乎没有数量损失的情况下产生估计 200,000 美元的额外利润；

(9) through these and many other steps, restored the earning capacity to a level commensurate with the capital employed.

9. 通过这些和其他的步骤，将公司的盈利能力提升到了和投入相称的地步。

In 1963, the heavy corporate taxes we were facing (Harry surprised me by the speed with which he had earned up our tax loss carry-forward) coupled with excess liquid funds within the corporation compelled us to either in some way de-incorporate or to sell the business.

1963 年，我们面临着沉重的公司税（我对Harry 快速赚钱的速度感到惊讶，以至于我们若继续经营下去将会承受很大的税收损失）加上公司内部流动资金过剩，迫使我们以某种方式解散公司或出售业务。

We set out to do either one or the other before the end of 1963. De-incorporating had many problems but would have, in effect, doubled earnings for our partners and also eliminated the problem of corporate capital gain tax on Dempster securities.

我们会在1963年底之前采取行动。解散公司会有很多问题，但实际上会使我们的合作伙伴的收益翻倍，并且还消除了对 Dempster 证券征收公司资本利得税的问题。

At virtually the last minute, after several earlier deals had fallen through at reasonably advanced stages, a sale of assets was made. Although there were a good many wrinkles to the sale, the net effect was to bring approximately book value. This, coupled with the gain we have in our portfolio of marketable securities, gives us a realization of about 80 per share. Dempster (now named First Beatrice Corp. - we sold the name to the new Co.) is down to almost entirely cash and marketable securities now. On BPL's yearend audit, our First Beatrice holdings were valued at asset value (with securities at market) less a 200,000 reserve for various contingencies.

在早前几笔交易过早的夭折之后，我们在最后一分钟将资产出售了。尽管这比出售问题多多，但是基本账面价值的以实现。这笔交易加上股票市场上价格提升带来的收益让我们每股价值达到了80美元。Dempster （现在更名为 First Beatrice Corp.——我们把这个名字卖给了新公司）现在几乎完全是现金和有价证券。在 BPL 的年终审计中，我们持有的 First Beatrice 资产按资产价值（包含市场上的证券）减去 200,000 美元的各种应急准备金进行估值。

I might mention that we think the buyers will do very well with Dempster. They impress us as people of ability and they have sound plans to expand the business and its profitability. We would have been quite happy to operate Dempster on an unincorporated basis, but we are also quite happy to sell it for a reasonable price. Our business is making excellent purchases -- not making extraordinary sales.

我们认为买家会把 Dempster 经营得很好。 他们给我们留下了深刻的印象，他们是有能力的人，也有有扩大业务和盈利能力的合理计划。 我们很乐意以非法人形式经营 Dempster，但我们也很乐意以合理的价格出售它。 我们的业务是以出色的价格买入——而不是卖个高价。

Harry works the same way I do -- he likes big carrots. He is presently a limited partner of BPL, and the next belt-tightening operation we have, he's our man.

Harry的工作方式和我一样——喜欢有利可图。 他目前是 BPL 的有限合伙人，如果下次有类似的工作，我们还是会喊上他。

The Dempster saga points up several morals:

Dempster的案例体现了若干准则：

(1) Our business is one requiring patience. It has little in common with a portfolio of high-flying glamour stocks and during periods of popularity for the latter, we may appear quite stodgy. It is to our advantage to have securities do nothing price wise for months, or perhaps years, why we are buying them. This points up the need to measure our results over an adequate period of time. We suggest three years as a minimum.

1. 我们的工作需要耐心。我们和那些高高在上的股票投资组合几乎没有共同点，在他们高高在上的时候，我们往往显得乏善可陈。股价在几个月甚至几年不动反而是我们的优势，这也是为什么我们会持续买入的原因。因此衡量BPL投资结果最好要按照3年起步。

(2) We cannot talk about our current investment operations. Such an open-mouth policy could never improve our results and in some situations could seriously hurt us. For this reason, should anyone, including partners, ask us whether we are interested in any security, we must plead the “5th Amendment.”

2. 我们不能讨论当前正在进行的投资。这种大嘴的行为对我们的投资收益百害而无一益。因此，如果任何人（包括合伙人）问及我们是否对任何股票感兴趣时。我们将行使第五修正案的赋予我们的权利--沈默權。