151,610,700 American Express Company ................... 13.1 $ 1,287 $ 7,887
35,563,200 Anheuser-Busch Companies, Inc............. 4.8 1,718 1,861
60,828,818 Burlington Northern Santa Fe.................. 17.5 4,731 5,063
200,000,000 The Coca-Cola Company ........................ 8.6 1,299 12,274
17,508,700 Conoco Phillips ....................................... 1.1 1,039 1,546
64,271,948 Johnson & Johnson.................................. 2.2 3,943 4,287
124,393,800 Kraft Foods Inc........................................ 8.1 4,152 4,059
48,000,000 Moody’s Corporation .............................. 19.1 499 1,714
3,486,006 POSCO.................................................... 4.5 572 2,136
101,472,000 The Procter & Gamble Company ............ 3.3 1,030 7,450
17,170,953 Sanofi-Aventis......................................... 1.3 1,466 1,575
227,307,000 Tesco plc.................................................. 2.9 1,326 2,156
75,176,026 U.S. Bancorp ........................................... 4.4 2,417 2,386
17,072,192 USG Corp................................................ 17.2 536 611
19,944,300 Wal-Mart Stores, Inc. .............................. 0.5 942 948
1,727,765 The Washington Post Company .............. 18.2 11 1,367
303,407,068 Wells Fargo & Company......................... 9.2 6,677 9,160
1,724,200 White Mountains Insurance Group Ltd. .. 16.3 369 886
Others ...................................................... 5,238 7,633
Total Common Stocks ............................. $39,252 $74,999
*This is our actual purchase price and also our tax basis; GAAP “cost” differs in a few casesbecause of write-ups or write-downs that have been required. Overall, we are delighted by the business performance of our investees. In 2007, American Express, Coca-Cola and Procter & Gamble, three of our four largest holdings, increased per-share earnings by 12%, 14% and 14%. The fourth, Wells Fargo, had a small decline in earnings because of the popping ofthe real estate bubble. Nevertheless, I believe its intrinsic value increased, even if only by a minor amount. In the strange world department, note that American Express and Wells Fargo were both organized by Henry Wells and William Fargo, Amex in 1850 and Wells in 1852. P&G and Coke began business in 1837 and 1886 respectively. Start-ups are not our game.
I should emphasize that we do not measure the progress of our investments by what their market prices do during any given year. Rather, we evaluate their performance by the two methods we apply to the businesses we own. The first test is improvement in earnings, with our making due allowance for industry conditions. The second test, more subjective, is whether their “moats” – a metaphor for the superioritiesthey possess that make life difficult for their competitors – have widened during the year. All of the “big four” scored positively on that test.
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