Shareholder letters offer a chance to communicate in an approachable tone with investors exhausted by financial babble and obfuscation. Just make sure to read the room and not get too cute.

JD Wetherspoon owns and operates pubs and hotels across the United Kingdom and Ireland, and their founder and chairman is known to not mind a rant. Consider his opening comments in the company’s 2022 annual report.

“To coin a Shakespeare phrase, “the multiplying villainies of nature do swarm upon” the hospitality industry, following the lockdowns and restrictions of the pandemic – and surprisingly perhaps, the aftermath has been just as difficult for many companies. Most commentators, including most publicans, understandably predicted a post-lockdown boom, in which the public would react to enforced cabin fever by embarking on a celebratory spree, but the reality has, in contrast, been a painstakingly slow recovery in sales, for some but not all, accompanied by great inflation in costs. A possible reason for the much slower-than-anticipated recovery has been an underestimation of the power of habit in determining human behaviour. During lockdown, dyed-in-the-wool pub-goers, many for the first time, filled their fridges with supermarket beer – and it has proved to be a momentous challenge to persuade them to return to the more salubrious environment of the saloon bar.”

Translation? The pandemic still sucks. People said things would get better, but they were wrong, and everyone is still getting smashed at home. But at least other companies’ stocks are in the tank. Meantime, let me charm you by quoting the Bard.

And what of that ownerless “underestimation” of human behaviour? It smacks of classic non-apologies such as “We regret that these events occurred” and “I’m sorry that you took things the wrong way.”

Now cut to Warren Buffett (you knew any discussion of shareholder letters had to invoke the Oracle of Omaha) and his first-person culpability in Berkshire Hathaway’s 2022 annual report.

“Over the years, I have made many mistakes. Consequently, our extensive collection of businesses currently consists of a few enterprises that…enjoy very good economic characteristics, and a large group that are marginal. Along the way, other businesses in which I have invested have died, their products unwanted by the public.”

So how could Wetherspoon have done better? Maybe something like:

Our industry is recovering from the pandemic slower than expected, and we overestimated the public’s willingness to come back to pubs. This and supply chain issues and inflation have hurt our stock’s performance.

A little dry? Perhaps. But it’s straightforward, and while some well-considered humour can have a place in a shareholder letter (more on that in an upcoming post), it’s best reserved for when your investors have something to toast.

Need to deliver tough news in a way that shows and earns respect? Let’s chat.