Thursday, February 26, 2015

Warren Buffett's 50th Anniversary Letter to Berkshire Shareholders and Some Thoughts on the Early Years

We've been following the Omaha insurance salesman since passing on BKHT at $800.

One of the things to note about the partnership and early Berkshire days is that Warren was a bit wilder than subsequent hagiography would have one believe. Some of our posts after the Financial Times links.
From FT Alphaville:

A portrait of the takeover artist as a young man: Warren Buffett’s 1965 letter
No doubt readers have set aside a few hours this coming Saturday to digest Warren Buffett’s annual letter to Berkshire Hathaway shareholders, which this year weighs in at a record 20,000 words.

It is the Golden Anniversary edition, with musings not just on the past year but also on what the next 50 might hold. We are promised a little reminiscing, too — which prompted us to look back to the time when Mr Buffett assumed control of an ailing New England textile manufacturer and set out on his most extraordinary journey.

Fifty years ago, the Omaha oracle was running an investment fund, the Buffett Parternship, for which Berkshire was just the latest in a number of positions. The annual letter covering 1965 is recognisably Buffett; you can tell from the LBJ joke at the very beginning.
The partnership had been buying shares in Berkshire for more than two years before the 34-year-old Mr Buffett resolved to take control of the company, getting himself elected to the board on May 10, 1965 and installing new management. This is how he first described Berkshire to his investors (there are points for identifying the “West Coast philosopher” mentioned below)....MORE

Some of our posts on the early Warren:
Oct. 2010
"Warren Buffett: Buying Berkshire Hathaway Was $200 Billion Blunder" (BRK.B; BRK.A)
Oct. 2010
"Warren Buffett, Mr. Market and the Buffett Partnership Letters, 1959-1969 (BRK.A; BRK.B)"
We first posted the partnership letters in September 2007 when it was one of our most popular offerings.
This is a repost from Sept. 2008 with the special bonus feature of a few of the early Berkshire Letters to Shareholders.
But Wait, there's more! The link to Warren's Mr. Market quote....
Nov. 2012
Buffett Redux: How Would the Oracle Do It If He Was Starting Over Today? (BRK)
Buffet's partnership days were more akin to hedge fund behavior than they were to deep value investing.
So, for that matter, were some of the Graham-Newman trades. See for example the cocoa bean/common stock arbitrage in "Living La Vida Cocoa: Warren Buffett, Berkshire Hathaway and the Chocolate Wars (BRK.A; BRK.B; CBY; KFT; HSY)", it pretty much puts the lie to the Efficient Market Hypothesis.
Feb. 2013
Warren Buffet's Columbia University Talk Upon the 50th Anniversary of 'Security Analysis' (he doesn't seem to have much use for EMH)

May 2013
The Question Most Asked of Warren Buffett in 1961 (Warren Buffett, Mr. Market and the Buffett Partnership Letters, 1959-1969 )

July 2014
"Warren Buffett’s Early Investments" (BRK.b)
Much closer to gunslinger than the current iteration.
And a slightly different take:
Warren Buffet: The King of Leveraged Low Beta (BRK.B)

In addition we have around 500 other Buffett and/or Berkshire posts, use the search blog box, top left, if interested.