Events and Happenings Over the Past 55 Years, Warren Buffett Has Grown Berkshire Hathaway Inc. Into No. 11 on the Fortune 500 Li
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Events and Happenings Over the past 55 years, Warren Buffett has grown Berkshire Hathaway Inc. into No. 11 on the Fortune 500 list of U.S. corporations. Buffett describes the Omaha-based company as his masterpiece, a work of financial ―art‖ that he seeks to enhance each day and build into a lasting source of economic energy. Almost from the start — he was born on Aug. 30, 1930, to Howard Buffett and the former Leila Stahl — Buffett showed an ability to turn dollars invested into dollars earned. His success and visibility as a business leader and financial guru will attract an estimated 40,000 people to Berkshire's annual shareholders meeting and related events over the weekend, plus international attention from news organizations. (Steve Jordon & Joe Ruff, 2010) Below are some key landmarks along the way: (Balaji Ganesan, 2013) Year Events Happenings 1936 Warren started selling Juicy Fruit chewing gums as packs. When asked for 1 piece, he would not sell and he thought he may be left behind with 4 pieces which could not be sold too. He made 2 cents per pack profit. Warren used to purchase Coca-Cola in six packs for 25 cents from his grandfather‘s grocery store – Buffett and Son. He will sell each Coke can for 5 cents. Profit of 5 cents per pack. 1941 Warren was 11 years old and buys his first stock - 6 Cities Service (now known as CITGO – an Oil company) shares (3 for himself and 3 for his sister Doris) at $38 per share. That is all the money he had at that time. (Little or No diversification, which he will continue to do throughout investment career) Share price fell to $27 and within a short span climbs to $40. They sold the stock at $40, but, the stock shot up to $202 in next few years. He later cited this experience as an early lesson in patience in investing. 1943 He files his first tax return and deducts his bike as a work expense for $35. 1945 Warren makes $175 monthly selling Washington Post newspapers and saves $1200 to buy a 40 acre farmland in Omaha – Nebraska. 1947 Warren joins with his friend Donald Danly stars a company called Wilson Coin Operated Machines, to buy a pinball machine at a cost of $25 and places in nearby barber shop. Wilson Coin makes $50 per week for Warren and Donald. Warren does tax returns for himself and Wilson Coin. In next few months they owned 3 machines and a year later sold them for $1200. 1949 - Warren‘s savings reaches $9800. Warren Buffett joins Columbia University 1954 and learns from Benjamin Graham. He was willing to work for Benjamin Graham, even for free, but was not offered a job. Warren returned to Omaha, purchased a Texaco station, but did not go well. He was also working as an Investment salesman for Buffett-Falk & Company, at his father's brokerage firm. 1954 Benjamin Graham called him again and offered a job for $12000 a year. Here, he worked closely with Walter Schloss. 1956 Graham decided to retire and folded his business. Warren's savings have grown from $9,800 to $140,000. Warren returned to Omaha and on May 1, created Buffett Associates Ltd. Seven family members and friends invested totally $105000. Warren invested only $100. 1957 Buffett added few more partnerships and was managing totally 5 partnerships, all from his home. 1958 At the end of 3 years, Buffett has doubled the partner’s money. 1959 Warren was introduced to Charlie Munger by his friend Edwin Davis in a dinner. Charlie Munger later becomes the Vice Chairman of Berkshire Hathaway. 1961 Buffett is running seven partnerships in 1961; Buffett Associates, Buffett Fund, Dacee, Emdee, Glenoff, Mo-Buff, and Underwood. Partnerships were worth few millions, Buffett made his first million dollar investment in Dempster - a windmill manufacturing company. Sanborn Map Company accounted for 35% of the partnerships‘ assets. He explained to the partners that in 1958 Sanborn was selling at $45 per share when the value of its investment portfolio itself was at $65 per share which meant that it was undervalued by $20 per share with a map business coming in for nothing. Buffett reveals that he earned a spot on the board of Sanborn. 1962 Buffett went to New York to meet his old acquaintances to include more partners and raise capital. Collected few hunderds of thousand dollars. Buffett partnerships were worth $7.2 million. Buffett merged all partnerships into one and named as Buffett Partnerships Ltd. Munger introduced Warren to Harry Bottle who cut costs, laid off workers, and turned Dempster to generate cash. Buffett noticed Berkshire Hathaway selling at $8 a share and started buying aggressively. 1963 Buffett sold Dempster for $2.3 million gain, 3x times the invested amount. Buffett‘s partnerships began aggressively purchasing Berkshire paying $14.86 per share while the company had working capital was at $19 per share, this did not include the value of fixed assets. Buffett partnership becomes a single largest shareholder of Berkshire Hathaway. 1964 Due to a financial crisis, American Express share falls to $35. Buffett found the value and started buying aggressively. 1965 Buffett invested $4 million in Walt Disney after a meeting with Walt Disney himself – almost 5% of the company. Buffett takes entire control of Berkshire Hathway, and named Ken Chase to be the CEO. 1966 Buffett closes the partnership to new money. Buffett wrote in his letter ―unless it appears that circumstances have changed (under some conditions added capital would improve results) or unless new partners can bring some asset to the partnership other than simply capital, I intend to admit no additional partners to BPL.‖ Warren invests in Hochschild, Kohn (Departmental Store in Baltimore). Warren‘s personal investment in the partnership increased to approximately $6.8 million. 1967 Buffett Partnership now owns 59.5% of Berkshire Hathaway. Berkshire Hathaway paid 10 cents as dividend. This is the first and only dividend it has paid ever. Partnership was worth $65 million. Buffett‘s personal investment was $10 million. Buffett told his partners that in the current raging bull market he could not find good investments. He also briefly considered leaving investing to pursue other interests. American Express share reached $180, making $20 million profit on $13 million investment. Berkshire Hathaway acquired National Indemnity Insurance for $8.6 million. Berkshire acquired National Fire and Marine Insurance Company. 1968 Partnership was worth $104 million. 1969 Berkshire acquired Sun Newspapers (Publishing), Rockford Bank (Banking), Illinois National Bank (Banking) and Blacker Printing Company (Publishing). Buffett decided to close the partnership and liquidated the assets to the partners. From 1957-1969 Partnership's returns were 29.5%. Warren has three recommendations 1. Partners consider Bill Ruane's Sequoia Fund or 2. Investors take cash or 3. Take shares in Berkshire Hathaway that Warren now controls. Warren‘s personal stake was worth $25 million. 1970 The Buffett partnership is completely dissolved and divested of its assets. Warren owns 29% of the company and becomes the chairman. 1972 Through Blue Chips Stamp Company, Berkshire buys See‘s Candies (Chocolates) and Wesco Financial Corp (Financial Services). 1974 Due to falling stock prices, the value of Berkshire Hathaway portfolio began to fall. Warren‘s personal network falls by more than 50%. 1975 Buffett merges Berkshire and Diversified – the firm controlled by Munger. Munger gets 2% stock of Berkshire and becomes its vice chairman. 1976 Berkshire invests $4 million in GEICO (Insurance) when its stock price was just above $2. Until 1996 Buffett was investing in GEICO regularly until 1996, when Berkshire completely acquired the company. Berkshire subsidiary National Fire and Marine Insurance Company acquired Central Fire & Casualty Company, and Cypress Insurance Company. 1977 Berkshire invested in the Buffalo Evening News (Publishing) for $32.5 million. He also invests in Interpublic (Advertising) and Ogilvy & Mather (Advertising), Kaiser Industries (Metals and Mining) and Knight-Rider (Publishing). 1978 Berkshire invested in SAFECO (Insurance) and ABC Broadcasting (TV Network) 1979 Berkshire was trading at $290 per share. Warren‘s personal networth was approximately $100 million. Was receiving $50000 per year as salary. Berkshire started to buy shares in General Foods (Foods), Handy & Harman (Metals and Mining), Affiliated Publications (Publishing), Media General (Publishing), FW Woolworth (Retail), Amerada Hess (Oil), Precision Steel Warehouse (Materials and Construction). 1980 Berkshire buys stock of RJ Reynolds (Tobacco), ALCOA (Metals and Mining), Pinkerton (Professional Services), Cleveland-Cliffs Iron (Metals and Mining), National Detroit (Banking), Times Mirror (Publishing), National Student Marketing (Financial Services). 1981 Berkshire buys stock of Arcata (Forest products/Paper), and GATX (machinery). 1982 Buffalo Evening News was the only local newspaper of Buffalo and its name is changed to Buffalo News. The newspaper earned $19 million in its first year without competition. By the late eighties the Buffalo News was earning $40 million/year. Berkshire invested in Time (Publishing), Crum & Forster (Insurance). 1983 Berkshire merged with Blue Chip Stamps, which a priori was a majority owned subsidiary of Berkshire. Berkshire Hathaway purchases Nebraska Furniture Mart (Furniture) for $60 million. Berkshire portfolio was worth $1.3 billion. Begins with $775 per share and ends the year with $1310 per share. Warren‘s personal network was $620 million, and makes to the Forbes‘ list of millionaires for the first time. 1984 Berkshire buys $139 million of Washington Public Power Supply System Bonds. Berkshire invested in Exxon (Oil), Northwest Industries (Diversified). 1985 Buffett shuts down Berkshire Hathaway‘s textile business. Warren helped merger between ABC TV Network and Capital Cities (Communications). He was forced to leave the Board of Washington Post, (as the legislation prohibited him from sitting on the boards of both Capital Cities and Washington Post).