I have always been curious to know about all the investments Warren Buffett made in his career. Here’s my attempt to provide a timeline of how Buffett evolved into what he is today.
Warren
Buffett’s Career – Yesterday to Today
1936
– Age 6
Buffett started selling Juicy
Fruit chewing gum packs. When asked for 1 piece, he would not sell as he
thought he may be left with 4 pieces he could not sell. He made 2 cents profit
per pack.Buffett would also purchase Coca-Cola six packs for 25 cents from his grandfather’s grocery store – Buffett and Son. He would sell each Coke for 5 cents. Profit of 5 cents per pack.
1941
– Age 11
At 11 years old, Buffett buys
his first stock – 6 shares of Cities Service (now known as CITGO – an Oil
company) at $38 per share. He bought 3 for himself and 3 for his sister Doris.That is all the money he had at that time. Practiced little to no diversification at a young age which he continued to do throughout his investment career. The stock price fell to $27 but soon went to $40. He sold the stock at $40, but, the stock shot up to $202 in the next few years.
He later cited this experience as an early lesson in patience in investing.
1943
– Age 13
Buffett files his first tax
return and deducts his bike as a work expense for $35.
1945
– Age 15
Buffett makes $175 a month
selling Washington Post newspapers and saves $1200 to buy a 40 acre farmland in
Omaha, Nebraska.
1947
– Age 17
Buffett joins his friend
Donald Danly to start a company called Wilson Coin Operated Machines. The
business buys a pinball machine at a cost of $25 and places it in a nearby
barber shop. Wilson Coin makes $50 per week for Buffett and Donald.Buffett does tax returns for himself and Wilson Coin. In next few months they own 3 machines and a year later sells it for $1200.
1949
to 1954 – Age 19 to 24
Buffett’s savings reaches
$9800.He joins Columbia University and learns from Benjamin Graham. He was willing to work for Benjamin Graham, even for free, but was not offered a job.
Buffett 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.
In 1954, Benjamin Graham called him again and offered him a job for $12,000 a year. During this period, Buffett was able to also work closely with Walter Schloss.
1956
– Age 26
Graham decides to retire and
fold his business. Buffett’s savings have grown from $9,800 to $140,000.Buffett returned to Omaha and on May 1, created Buffett Associates Ltd. Seven family members and friends invest a total of $105k. Buffett invested only $100k.
1957
– Age 27
Buffett created more
partnerships and was managing a total of 5 partnerships, all from his home.
1958
– Age 28
After 3 years, Buffett
doubled the partner’s money.
1959
– Age 29
Buffett
and Munger Best Friends Forever
Buffett was introduced to
Charlie Munger by his friend Edwin Davis at a dinner. Charlie Munger later
becomes the Vice Chairman of Berkshire Hathaway.
1961
– Age 31
Buffett is running seven
partnerships by 1961; Buffett Associates, Buffett Fund, Dacee, Emdee, Glenoff,
Mo-Buff, and Underwood.The partnerships are worth a few million and 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
– Age 32
Buffett goes to New York to
meet his old acquaintances to include more partners and raise capital. He
collects a few hundreds of thousand dollars. Buffett partnerships is worth $7.2
million. Buffett then merges all partnerships into one and rename it as Buffett
Partnerships Ltd.Munger introduces Buffett to Harry Bottle, CEO of Dempster, who cut costs, laid off workers, and turned around Dempster to generate cash. At this time, Buffett notices Berkshire Hathaway selling for $8 a share and starts buying aggressively.
1963
– Age 33
Buffett sells Dempster for a
$2.3 million gain, 3x times the invested amount.Buffett aggressively purchases Berkshire paying $14.86 per share while the company had working capital of $19 per share. This did not include the value of fixed assets. Buffett partnership becomes a single largest shareholder of Berkshire Hathaway.
1964
– Age 34
American Express is victim to
the salad oil scandal and shares fall to $35. Buffett saw the
value and bought 5% of the company.
1965
– Age 35
Buffett invests $4 million in
Walt Disney after a meeting with Walt Disney himself which is almost 5% of the
company. Buffett takes full control of Berkshire Hathaway and names Ken Chase
to be the CEO.
1966
– Age 36
Buffett closes the
partnership to new money. Buffett writes in his letter that “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.”Buffett invests in Hochschild, Kohn which was a department store in Baltimore.
Buffett’s personal investment in the partnership is now approximately $6.8 million.
1967
– Age 37
Buffett Partnership now owns
59.5% of Berkshire Hathaway. Berkshire Hathaway pays a 10 cent dividend. This
is the first and only dividend it has paid ever.The Partnership is worth $65 million. Buffett’s personal investment is $10 million. Buffett tells his partners that in the current raging bull market he is unable to find good investments.
He also briefly considered leaving investing to pursue other interests.
American Express hits $180, making a $20 million profit on $13 million investment.
Berkshire Hathaway acquires National Indemnity Insurance for $8.6 million.
Berkshire acquires National Fire and Marine Insurance Company.
1968
– Age 38
Partnership is worth $104
million.
1969
– Age 39
Berkshire acquires Sun
Newspapers (Publishing), Rockford Bank (Banking), Illinois National Bank
(Banking) and Blacker Printing Company (Publishing).Buffett decides to close the partnership and liquidate the assets to the partners.
From 1957-1969 Buffett Partnership returns were 29.5%.
Warren has three recommendations to partners.
- Consider
joining Bill Ruane’s Sequoia Fund
- Take the
cash
- Take
shares in Berkshire Hathaway that Warren now controls
1970
– Age 40
The Buffett Partnership is
completely dissolved and divested of its assets.
Buffett
Partnership Performance
1972
– Age 42
Through Blue Chips Stamp
Company, Berkshire buys See’s Candies (Chocolates) and Wesco Financial Corp
(Financial Services).
1973
– Age 43
Berkshire starts buying
stocks in the Washington Post company (Publishing). Buffett becomes close
friends with Katharine Graham who controlled the company and its flagship
newspaper and becomes a member of the board of directors.
1974
– Age 44
Due to falling stock prices,
the value of Berkshire Hathaway portfolio begins to fall. Warren’s personal
network falls by more than 50%.
1975
– Age 45
Buffett merges Berkshire and
Diversified – the firm controlled by Munger.Munger gets 2% stock of Berkshire and becomes its vice chairman.
1976
– Age 46
Berkshire invests $4 million
in GEICO (Insurance) when its stock price was just above $2. Buffett
continually invests in GEICO until 1996, when Berkshire acquires the company.Berkshire’s subsidiary, National Fire and Marine Insurance Company, acquires Central Fire & Casualty Company, and Cypress Insurance Company.
1977
– Age 47
Berkshire invests 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
– Age 48
Berkshire invests in SAFECO
(Insurance), ABC Broadcasting (TV Network).
1979
– Age 49
Berkshire is trading at $290
per share.Warren’s personal net worth is now approximately $100 million and receives a $50k annual salary.
Berkshire starts 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
– Age 50
Berkshire buys stock in 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).
Berkshire
Hathaway Performance from 1970 to 1980
1981
– Age 51
Berkshire buys Arcata (Forest
products/Paper), and GATX (machinery).
1982
– Age 52
Buffalo Evening News is the
only local newspaper of Buffalo and its name is changed to Buffalo News.The newspaper earns $19 million in its first year without competition. By the late eighties, the Buffalo News is earning $40 million a year.
Berkshire invests in Time (Publishing), Crum & Forster (Insurance).
1983
– Age 53
Berkshire merges with Blue
Chip Stamps which was a majority owned subsidiary of Berkshire.Berkshire Hathaway purchases Nebraska Furniture Mart (Furniture) for $60 million.
Berkshire portfolio is worth $1.3 billion.
Begins with a stock price of $775 and ends the year at $1310.
Warren’s personal net worth has ballooned to $620 million and he makes the Forbes millionaire list for the first time.
1984
– Age 54
Berkshire buys $139 million
of Washington Public Power Supply System Bonds, invests in Exxon (Oil) and
Northwest Industries (Diversified).
1985
– Age 55
Buffett shuts down Berkshire
Hathaway’s textile business.He helps merge ABC TV Network and Capital Cities (Communications). Buffett is 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.
Berkshire purchases Scott and Fetzer who boast products like Kirby vacuums and World Book Encyclopedia. Also buys Fecheimer Brothers (Uniform company) and Beatrice (Food).
1986
– Age 56
Berkshire acquires Fechheimer
Brothers Company and invested in Lear Seagler (Aerospace)Berkshire’s stock price soars above the $3,000 mark.
1987
– Age 57
The stock market crashes in
October and Berkshire loses 25% of its value.The stock prices goes from $4,200 to $3,100 and Buffett’s wealth falls by $320 million.
Berkshire buys 12% of Salomon Brothers (Investment Bank).
1988
– Age 58
Buffett starts buying
Coca-Cola (Beverages) and eventually gains a 7% stake in the company for $1.2
billion.Berkshire buys Freddie Mac (Financial Services).
1989
– Age 59
Berkshire acquires Borsheim’s
(Jewelry) from the Friedman Family. Berkshire’s stock price rises from $4,800
to $8,000 per share.Berkshire buys Gillette (Toiletries) and Buffett’s personal fortune rises to $3.8 billion.
1990
– Age 60
Berkshire buys 10% of Wells
Fargo (Banking).
1991
– Age 61
Berkshire acquires H. H.
Brown (Footwear) and starts buying M&T Bank (Banking).Buffett serves as the CEO of Solomon Brothers following the firm’s treasury bond trading scandal. Berkshire invests in Guinness (Beverages).
1992
– Age 62
Berkshire acquires Central
States Indemnity Company (Insurance) of Omaha and Buffett continues to serve as
interim Chairman at Solomon Brothers.Berkshire becomes the largest shareholder of General Dynamics (Aerospace).
Berkshire’s stock shoots past the $10,000 mark.
1993
– Age 63
Berkshire acquires Dextor
(Footwear) which turns out to be a bad investment.
1994
– Age 64
The Warren Buffett Way by Robert G. Hagstrom Jr. is
published and becomes a bestseller.Berkshire invests in McDonald’s (Restaurants), Gannett (Publishing) and PNC Bank (Banking).
1995
– Age 65
Berkshire acquires Helzberg’s
Diamond Shops (Jewelry) and R. C. Willey (Home Furnishings).Berkshire Hathaway’s annual meeting is so well attended that it is held in Omaha’s Holiday Convention Center for the first time. Berkshire stock crosses $25,000 per share.
1996
– Age 66
Berkshire acquires the
remaining stake in GEICO to become 100% owned subsidiary.Berkshire acquires Flight Safety International (provider of professional aviation training).
Wesco Financial, a subsidiary of Berkshire, acquires Kansas Bankers Surety Co (Insurance).
1997
– Age 67
Berkshire acquires Star
Furniture (Furniture) and International Dairy Queen (Fast Food restaurants),
and also invests in Travelers (Insurance).Buffett invested 2% of his investment portfolio in silver.
Buffett makes a huge investment in US Airways (Airlines) which turns out to be a bad investment decision.
1998
– Age 68
Berkshire
acquires General Re (Re-insurance) and Executive Jet, later renamed
to NetJets (Private Aviation).
1999
– Age 69
Berkshire acquires Jordan’s
Furniture Company, a Massachusetts based furniture powerhouse. Also buys
parts of MidAmerican Energy Holdings Company, a utility company.
2000
– Age 70
Berkshire
Gains 1580% vs Dow Jones 280%
Buffett is still going
strong.Berkshire acquires a long list of companies.
- Ben Bridge
(Jewelry)
- CORT, the
leading national provider of rental furniture, accessories and related
services in the growing “rent-to-rent” furniture rental industry.
- Justin
Industries including Acme Building Brands.
- Shaw
Industries, the world’s largest manufacturer of tufted broadloom carpets.
- Benjamin
Moore, a leading manufacturer and retailer of premium paints, stains and
industrial coatings that was founded in 1883.
2001
– Age 71
The acquisitions and
purchases continue to increase.Berkshire acquires Johns Manville Corp (building products), MiTek, a provider of steel connector products, design engineering software and ancillary services for the global building components market.
Berkshire goes on to acquire XTRA Corporation (transport containers), H&R Block (Financial Services) and Moody’s Corporation (Financial Services).
Insurance claims from the 9/11 terrorist attack total $2.28 billion.
Buffett apologizes to his shareholders for failing to foresee the risk and properly price insurance coverage.
2002
– Age 72
Berkshire
acquire Larson-Juhl, a custom picture frame maker, Fruit of the Loom
(textile), Albecca (picture framing), Garan (apparel), CTB
(farming equipment) and The Pampered Chef (kitchenware).Berkshire and other investment groups buy $500 million in bonds issued by Level 3 Communications, the former Omaha fiber network company.
Buffett enters a deal where $11 billion worth of forward contracts is delivered in US dollars against other currencies. By April 2006, his total gain on these contracts is over $2 billion.
2003
– Age 73
Berkshire
acquires McLane (wholesale distributor), Clayton Homes (housing)
and Burlington Industries, one of the world’s most diversified marketers
and manufacturers of soft goods for apparel and interior furnishings.
2004
– Age 74
Bill Gates is elected as a
director for Berkshire Hathaway.
2005
– Age 75
Berkshire
acquires Medical Protective Company (Medical malpractice carrier) and
Forest River (leisure vehicles).Despite insurance business losses of about $2.5 billion caused by Hurricane Katrina, Berkshire records a gain of $5.6 billion.
Berkshire’s subsidiary, Shaw Industries, buys stock in Honeywell International. Berkshire joins the fun by buying Procter and Gamble (Consumer Goods) and Anheuser-Busch (Food and Beverage).
Berkshire stock crosses $90,000 per share.
2006
– Age 76
Buffett announces in June
that he will give away more than 80%, or about $37 billion, of his $44 billion
fortune to five foundations in annual gifts of stock, starting July 2006. The
largest contribution will go to the Bill and Melinda Gates Foundation.Berkshire stock crosses $100,000 per share.
The list of acquisitions and stock purchases continue.
- Business
Wire (media distributor)
- Russell
Corporation (athletic apparel)
- 80% of the
Iscar Metalworking Companies (IMC) in a transaction that valued IMC at
US$5 billion.
- Applied
Underwriters (insurance)
- TTI Inc
(electronic components distributor)
- Southern
Energy Homes (utility)
- Brooke Sports (athletic apparel)
2007
– Age 77
In a letter to shareholders,
Buffett announces that he is looking for a young successor or perhaps
successors to run Berkshire.Buffett had previously selected Lou Simpson, who manages the investment via GEICO, to fill that role. However, Simpson is only six years younger than Buffett.
The companies bought that year include
- Boat
America Corporation, which owns Seaworthy Insurance Company and controls
the Boat Owners Association of the United States.
- Leading
jewelry manufacturers Bel-Oro International and Aurafin LLC, which merges
into Richline Group.
- 60% of
Marmon Holdings (holding company that owns companies producing electrical
components).
- SE Homes
(home construction)
- BoatUS
(Boat America Corporation is the main supplier of towing, insurance and
other services to the nonprofit boater’s association)
2008
– Age 78
Berkshire buys
out Marmon Holdings and Coachmen Industries becomes a part of Forest
River (leisure vehicles).Berkshire buys $4.4b in bonds from Mars Inc (food and beverage). Makes $680m in profit off the investment.
2009
– Age 79
Berkshire’s subsidiary, Shaw
Industries, acquires Sportexe (a leading synthetic turf company).Berkshire acquires Cavalier Homes (home building company).
A $5 billion “paper” loss on investments and derivatives triggers a first-quarter loss for Berkshire. It is the biggest loss since the 9/11 terrorist attack. But earnings rebound later in the year.
2010
– Age 80
Berkshire buys out railroad
company Burlington Northern for $44 billion. As a result of the
acquisition, Berkshire enters the S&P 500, replacing Burlington Northern
Santa Fe.Berkshire subsidiary, McLane Company, acquires Kahn Ventures.
Berkshire invests in Munich Re (Insurance).
2011
– Age 81
Berkshire acquires Lubrizol
(Speciality Chemicals).
2012
– Age 82
Berkshire acquires Omaha
World-Herald (Publishing) and invests in IBM (Technology).
2013
– Age 83
Berkshire acquires a 50%
stake in H. J. Heinz Company (Food and Beverage).
Berkshire
is Worth $176,140 as of Oct 22.
2014
and Beyond
As Berkshire continues to
accumulate more cash, it’s capital spending will increase and you will no doubt
see big deals occur going forward.Buffett has one of the most illustrious investing careers the world has ever seen.
The story is not over yet.
This post was first published at old school value.
You can read the original blog post here The Evolution of Warren Buffett’s Career from 1936 to 2013.
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