This is a guest post by Balaji.G, author of Investing007.
I have always been curios 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 The Coca-Cola Company (NYSE:KO) 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, Warren 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
Warren 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
Warren 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
Warren 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.
Warren 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 Company (NYSE:AXP) 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 The Walt Disney Company (NYSE:DIS) 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.”
Warren 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 Company (NYSE:AXP) hits $180, making a $20 million profit on $13 million investment.
Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) 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