How Well Do You Really Know Warren Buffett?

The performance of Berkshire Hathaway Class A stock — which goes back to 1964, when Buffett took control — is even more eye-popping. Back then, Berkshire shares sold for about $19 apiece. As of Feb. 23, the original shares (now the Class A stock) commanded a price of $307,800 each — an annu... Read more ˅

The performance of Berkshire Hathaway Class A stock — which goes back to 1964, when Buffett took control — is even more eye-popping. Back then, Berkshire shares sold for about $19 apiece. As of Feb. 23, the original shares (now the Class A stock) commanded a price of $307,800 each — an annualized return of 20%, nearly three times that of the S&P 500.

The Oracle of Omaha was born on August 30, 1930. His lead partner at Berkshire Hathaway, Vice Chairman Charlie Munger, is 94. Their ages have raised questions about succession planning at the storied firm for decades now. In Berkshire Hathaway’s 2014 letter to shareho... Read more ˅

The Oracle of Omaha was born on August 30, 1930. His lead partner at Berkshire Hathaway, Vice Chairman Charlie Munger, is 94. Their ages have raised questions about succession planning at the storied firm for decades now.

In Berkshire Hathaway’s 2014 letter to shareholders, Buffett wrote, “Both the board and I believe we now have the right person to succeed me as CEO – a successor ready to assume the job the day after I die or step down. In certain important respects, this person will do a better job than I am doing.”

While he didn't say who that person is, two longtime Berkshire employees have notably been rising in the ranks and earning plaudits from Buffett. Ajit Jain and Greg Abel were elected to be directors of the Berkshire board in January 2018 and given the titles of vice chairmen. Jain manages the company's insurance operation, and Abel everything else.

Buffett never invests in gold. He bought Tesco in 2012, sold shares for a profit in 2013, but then took a $444 million loss when he liquidated in 2014. He blamed himself for not reacting quickly enough to the firm’s management problems. Dexter Shoes, based in Maine, initially a... Read more ˅

Buffett never invests in gold. He bought Tesco in 2012, sold shares for a profit in 2013, but then took a $444 million loss when he liquidated in 2014. He blamed himself for not reacting quickly enough to the firm’s management problems. Dexter Shoes, based in Maine, initially appealed to Buffett with a strong brand and top-notch management. But low labor costs overseas eventually undercut the business, and eight years later Buffett folded Dexter into another Berkshire subsidiary.

Berkshire Hathaway was a large, struggling New England textile manufacturer when Buffett’s hedge fund took a stake in the early 1960s. A tiff over the price of a stock buyback led to Buffett launching a takeover bid for the firm. “I found myself with more than 25% of [his fund’s money] invested in a terrible business about which I knew very little. I became the dog who caught the car.” Ultimately, the textile business was shut down, in 1985. But Buffett kept the company’s name.

According to Buffett biographer Roger Lowenstein, a “scrawny and unpolished” 19-year-old Buffett struck his alumni interviewer as “not quite Harvard.” Buffett was accepted at Columbia, where he connected with Benjamin Graham, a professor and pioneering stock analyst. Buffett has... Read more ˅

According to Buffett biographer Roger Lowenstein, a “scrawny and unpolished” 19-year-old Buffett struck his alumni interviewer as “not quite Harvard.”

Buffett was accepted at Columbia, where he connected with Benjamin Graham, a professor and pioneering stock analyst. Buffett has frequently credited his mentor with giving him the tools to become a true investor. He graduated in 1951.

Virtually all of Buffett’s political donations have gone to Democrats, though in 2012 he said he was not a “card-carrying” Democrat, having supported some Republicans as well. He made headlines in 2014 when, for the first time, he made a soft-money donation of $25,000 to a PAC sup... Read more ˅

Virtually all of Buffett’s political donations have gone to Democrats, though in 2012 he said he was not a “card-carrying” Democrat, having supported some Republicans as well.

He made headlines in 2014 when, for the first time, he made a soft-money donation of $25,000 to a PAC supporting Hillary Clinton’s candidacy for president. He gave her $2,700 directly for her 2016 bid as well. Leading up to the 2008 presidential election, he gave money both to her campaign and Barack Obama’s.

Buffett’s father, Howard, was a Republican with strong isolationist, anti-New Deal beliefs. He served four terms in Congress.

The insurer first piqued Buffett’s interest when he was at graduate school (his mentor and professor, Benjamin Graham, had become Geico’s chairman). The company’s model of selling insurance directly (which it continues to do today) and profit margins appealed greatly to the young Buffett, a... Read more ˅

The insurer first piqued Buffett’s interest when he was at graduate school (his mentor and professor, Benjamin Graham, had become Geico’s chairman). The company’s model of selling insurance directly (which it continues to do today) and profit margins appealed greatly to the young Buffett, and he put about two-thirds of his savings into the stock in 1951.

He later sold those shares, but, decades later, as the insurer teetered close to bankruptcy, Berkshire Hathaway stepped in and bought a large stake in 1976. The stock quadrupled within six months of his purchase. In 1996, Berkshire bought all of Geico and brought it in-house.

Buffett started delivering papers during his family’s time in Washington, D.C. He quickly scaled up to managing multiple routes for multiple papers, and later had other delivery boys working for him. Today, Berkshire Hathaway owns more than 30 newspapers, including the Omaha World-Herald in... Read more ˅

Advantages such as a powerful brand, high market share, a low cost structure, and barriers to entry by others in the industry are what Buffett considers paramount. This strategy is enshrined in Buffett’s concept of “economic moats.” Here’s how he describes it: “The most important thing ... Read more ˅

Advantages such as a powerful brand, high market share, a low cost structure, and barriers to entry by others in the industry are what Buffett considers paramount. This strategy is enshrined in Buffett’s concept of “economic moats.” Here’s how he describes it: “The most important thing to me is figuring out how big a moat there is around the business. What I love, of course, is a big castle and a big moat with piranhas and crocodiles.”

Honest, capable management is also important when Buffett goes shopping, but not at the top. After all, he also once said, “I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.”

Buffett expects the companies in which he invests to run lean, and he extends that philosophy to the parent company. Employee responsibilities include tax and regulatory compliance, shareholder and media inquiries, and running the country's largest annual shareholder meeting. By intention... Read more ˅

Buffett expects the companies in which he invests to run lean, and he extends that philosophy to the parent company. Employee responsibilities include tax and regulatory compliance, shareholder and media inquiries, and running the country's largest annual shareholder meeting. By intention, the actual operation of the company’s holdings is left to the division managers. “In fact,” Buffett said in a recent annual report, “we delegate almost to the point of abdication.”

Buffett notes with pride in his 2015 letter that the 24 staffers who worked alongside him at the company’s headquarters last year were the exact same people as the year before. "Can you imagine another very large company – we employ 361,270 people worldwide – enjoying that kind of employment stability at headquarters? At Berkshire we have hired some wonderful people – and they have stayed with us."

Berkshire Hathaway has an odd approach toward dividends. While the company is perfectly happy to collect them from stocks in which it is invested, it has itself paid one out only once, in 1967. Buffett has remarked that doing so was a mistake. Two main reasons for this strategy: Buffett... Read more ˅

Berkshire Hathaway has an odd approach toward dividends. While the company is perfectly happy to collect them from stocks in which it is invested, it has itself paid one out only once, in 1967. Buffett has remarked that doing so was a mistake.

Two main reasons for this strategy: Buffett prefers to retain earnings to reinvest in current holdings and for additional acquisitions and because, he argues, paying dividends to his investors results in double taxation: once for the company and once for the recipient. If you want income, he says, sell some shares.

In 2014, a shareholder proposal to force Berkshire to pay “a meaningful annual dividend” was solidly rejected at the company’s annual meeting. Berkshire Hathaway has, however, spent money to buy back shares over the years, another way of returning cash to shareholders.

Buffett drives himself and favors large, American-brand luxury sedans that he keeps for years.

The predecessor to the XTS, a 2006 Cadillac DTS, was sold at a charity auction (with his signature on the dashboard) for $122,500, more than ten times its market value.

Buffett has serenaded his stockholders at the company’s annual meetings (dubbed the Woodstock of capitalism) on multiple occasions, along with performances with Jon Bon Jovi and Paul Anka, among others. It’s all on YouTube... Read more ˅

Berkshire Hathaway doesn’t believe in spin-offs, seeing them mainly as a way for investment bankers to make money on the transactions. “Our companies are worth more as part of Berkshire than as separate entities,” Buffett wrote to shareholders in 2014. “One reason is our ability to move fund... Read more ˅

Buffett has had an evolving relationship with executive jets. When Berkshire Hathaway first acquired one in 1986, it was not without some rationalization on Buffett’s behalf, in light of what he described as his own “rather intemperate remarks about corporate jets.” A later, large... Read more ˅

Buffett has had an evolving relationship with executive jets.

When Berkshire Hathaway first acquired one in 1986, it was not without some rationalization on Buffett’s behalf, in light of what he described as his own “rather intemperate remarks about corporate jets.” A later, larger jet was first dubbed the “The Indefensible” then renamed “The Indispensable” after its value to the company emerged.

In fact, Buffett became so enamored of private aviation that, in 1998, Berkshire Hathaway bought the fractional-ownership company NetJets, which now provides his air services.

“Once you’ve flown NetJets,” Buffett told his shareholders, “returning to commercial flights is like going back to holding hands.”