After having completed Buffett by Roger Lowenstein, a great book about this master investor, I thought of creating a summary, or actually a time line, of the "master and his canvas". In this timeline I have indicated the page numbers of the above-mentioned book from where I got the information.
0. Selling paper and cherry coke -Buffett breathed business since he was a young boy. By the time he was 20 years old in 1950, he had saved $9,800 by selling newspaper and cherry coke.
1. College years - From 1950 to 1956, Buffett perfects his investment style by practicing it again and again; by 1956 he has $140,000. - page 58
2. First partnership - In 1956 Buffett forms his first partnership with seven people - his sister Doris, her husband, Aunt Alice, Dr. Thompson, his ex roommate Chuck Peterson, his mother and Dan Moren his lawyer. They altogether put $105K, of which Buffett contributes a whopping $100. Yeah, I did not miss any zeros; it is indeed one with two zeros. - page 58.
3. The same year he starts two more partnerships, one with physicist Homer Dodge who put in $120K. By the start of 1957 he is managing $300k.
4. Summer of 1957 - Ed Davis, a prominent urologist, put up $100K. By the end of 1957 Buffett is running 5 partnerships totaling $500k.
5. 1958 - Buffett's portfolio soars by 41%, beating the Dow which soars 39%.
6. 1960 - Buffett approaches William Angle, a cardiologist, and asks if he could get 10 doctors to invest $10k each.
7. 1961 - Buffett invests $1 million in Dempster Mill Manufacturing. By 1961 the partnership has gained 251% - page 61
8. The first million - At the beginning of 1962, the Buffett partnership has $7.2 million. Of this, $1 million belonged to Buffett. The partnership has 90 people. - page 73.
9. He merges all partnerships to one and quadruples the minimum investment to $100,000. He also moves his office to Kiewit Plaza.
10. 1963 - Buffett sells Dempster, netting the partnership a $2.3 million profit - page 77.
11. 1963 - Invests in Berkshire Hathaway at $7.60 / share.
12. The partnerships jump 39% in 1963 and 28% in 1964. Buffett is managing $22 million, with his personal net worth being $4 million.
13. By the beginning of 1966, the partnership is worth $44 million, of which Buffett is worth $6.8 million.The partnership had grown 1,156% compared to 122% of Dow.
14. By 1967 the partnership is worth $65 million and his net worth is $10 million. - page 105.
15. The bulk of his profits until now are derived from American Express (NYSE:AXP), in which he has invested $13 million and has made a $20 million profit.
16. 1969 - Buffett closes his partnership, worth $100 million, and pockets $25 million.
17. Buffett's partners were later referred to Bill Ruane, a Graham follower and the person setting up the Sequoia Fund.
18. The partnership liquidates all but two of its investments, Berkshire Hathaway and Diversified Retailing. - page 119.
19. Berkshire and Hathaway were independent textile businesses that merged in 1955 creating Berkshire Hathaway.
20. May 10 1965, Buffett becomes chairman of Berkshire Hathaway. Its stock is trading at $18/share.
21. In 1967 he buys National Indemnity for $50/share for total price of $8.6 million - page 135.
22. In successive years Buffett buys from the float of National Indeminity companies like:
i) Sun Newspaper of Omaha.
ii) Rockford Bank.
23. In 1970, with the dissolution of the Buffett Partnership, Buffett becomes 29% owner of Berkshire. Since then he has owned 474,998 shares of Berkshire - page 350.
24. In 1970 Berkshire's profits were:
i) Textiles - $45k
ii) Insurance $2.1 million
iii) Banking $2.6 million.
25. 1972 - Berkshire's insurance business had a float of $100 million of which only $17 million was invested in stocks.The rest were invested in bonds because Buffett was not able to find any bargains - page 148.
26. Feb 1973 - Buffett buys 18,600 shares at $27 each of the Washington Post (WPO); when the stock falls to $23 Buffett buys 40,000 more. By October 1973. Berkshire is the largest outside investor of Washington post. - page 152
27. Berkshire's share price in early 1974 had dropped from $80 to $40.Even Berkshire's portfolio was sinking. By end of 1973 its portfolio is $40 million with a net cost of $52 million.
28. In 1971 Buffett invests $25 million in See's Candies, by far its biggest investment - page 164.
29. Early 1975 the SEC interrogates Buffett on charges of manipulating Wesco's (NYSEMKT:WSC) stock price.
30. In 1975 Buffett merges Berkshire and Diversified, the firm controlled by Munger. Munger gets 2% stock of Berkshire and becomes its vice chairman.
31. In April 1976 Berkshire invests $4 million in GEICO when its stock price was just above $2. This was first of the series of purchases that will last till 1994 when he completely buys GEICO.
32. 1977 - Berkshire Hathaway's share price is at $132 and Buffett's net worth is $70 million - page 215.
33. 1978 - Evening News, one of Buffett's businesses, loses $2.9 million pre tax.
34. In 1982 Courier Express it closed because of heavy losses. Evening News became the only local newspaper of Buffalo and its name is changed to Buffalo News. It becomes a goldmine for Buffett. The newspaper earned $19 million in its first year without competition. By the late eighties the Buffalo News will earn $40 million/year , way more than what Buffett had invested.
35. 1981 - Berkshire trades at $470.
36. 1982 - Berkshire trades at $750 - page 242.
37. By 1983 Berkshire's investments are worth $1.3 billion.
38. September 1983 - Berkshire trades at $1,245.In 1965 Dow was at 933 and Berkshire at $18.By 1983 Berkshire is at $1,310 and the Dow is at 1,259. Buffett's net worth is $620 million - page 243.
39. 1985 - Berkshire trades at $2,600.
40 By 1987 Berkshire trades at $3,450. Buffett had sold all the shares of his portfolio except cap cities, GEICO and Washington Post. - page 296.
41. Black Monday era - October 19,1987 is considered black Monday, which triggers a series of stock market collapses all over the world. By the end of October, the Dow had lost 22%. A week before the fall Berkshire traded at $4,230. On October 16 it trades at $3,890 and on October 19 it falls to $3,170.
42. By spring of 1989 Berkshire has acquired $1.02 billion of Coca Cola (NYSE:KO) (7% of the company) at an average price of $10.96 - page 325.
43. After investing in Coca Cola Buffett becomes its director. - page 330.
44. In March 1989 Berkshire is trading at $4,800 and by the end of 1989 it is trading at $8,000.
45. Berkshire trades at $8,750 in September 1989 - page 360.
46. 1990 - Buffett buys 10% of Wells Fargo (NYSE:WFC) bank.The reason being that Carl Reichardt, the chairman of the bank who was famous for slashing costs , had once sold his jet to cut costs and Buffett appreciated this gesture - page 363
47. Buffett's investment in USAir (LCC) is his worst investment. - page 367.
48. After the debacle of 1990. By August 1991 Berkshire is again at $8,800.
49. November 1992 Berkshire is a $10k stock; by the end of 1993 it is $16,325; by 1995 it is 32,100 and by 1996 it is $40k. The net revenues in 1995 are $4.56 billion and
net income is $795 million.
50. Still going strong in the 21st century: Even though Berkshire's insurance business faced some huge losses in recent hurricanes and floods, the company's revenues have increased from $74 billion in 2004 to $98 billion in 2006.The net income has increased from $7.3 billion to $11 billion. The book value has increased from $85 billion to $108 billion in the corresponding time period. Wall Street has handsomely rewarded the master investor's baby by increasing its stock price from $84k in July 2005 to $110k in Jul-2007. A 30% gain in two years, which I would give an A+ considering that it is a mega large cap company (Berkshire's market cap is around $170 billion as of July 23,2007).
Berkshire Share Price at a Glance
Berkshire Hathaway's price has increased by 6,111 times in 42 years; this means $1,000 invested with Berkshire stock in 1965 would have become $6.1 million by now...