Buffett's Early Investments

[Liberty]

Good blog post on Buffett's early investments.

 

http://basehitinvesting.com/buffetts-early-investments/

[randomep]

 

 

Thanks for the article, but I am not convinced by the thesis. In the 50's and 60's buffett invested in 400 companies total so the majority must be cigar butts. They must all contribute to his overall results, because if he was getting 30-50% a year he cannot have laggards in his portfolio....

 

I'd love to have list of his holdings back then (not just the 5 or 6 mentioned in snowball and other books)

[Liberty]

 

 

Thanks for the article, but I am not convinced by the thesis. In the 50's and 60's buffett invested in 400 companies total so the majority must be cigar butts. They must all contribute to his overall results, because if he was getting 30-50% a year he cannot have laggards in his portfolio....

 

I'd love to have list of his holdings back then (not just the 5 or 6 mentioned in snowball and other books)

 

I think it depends what you think the thesis is. I would agree with "Buffett cared about quality earlier than most people think", that he wasn't one-dimensional in his thinking even that early, but I would not agree with "everything he bought back then was high quality rather than cigar butts". There were a bunch of those too, and I'm sure he did quite superbly with them too.

 

It's a bit like Ben Graham is known for cheap stocks but a lot of his returns came from holding GEICO for a long time.

[peter1234]

Big difference to today is certainly that it was buy and sell rather than buy and hold.

 

Since holding period was much shorter, compounding was a smaller part, biggest part was multiple expansion.

 

Making it kind of difficult to pay up for quality and have compounding increase business value.

 

But yes, if he could find dirt cheap quality (like Western Insurance), I am sure he took it.

 

;)

[Liberty]

Big difference to today is certainly that it was buy and sell rather than buy and hold.

 

Since holding period was much shorter, compounding was a smaller part, biggest part was multiple expansion.

 

Making it kind of difficult to pay up for quality and have compounding increase business value.

 

But yes, if he could find dirt cheap quality (like Western Insurance), I am sure he took it.

 

;)

 

Indeed. I think the environment he was operating in had something to do with it too, though. He had more bargains than he knew what to do with and seemed to frequently trade up (or trade down, depending how you look at it), which is something he couldn't do as often when 1) overall valuations went up and 2) he had more money, limiting him to bigger companies.

[mn_gophers1]

 

 

Thanks for the article, but I am not convinced by the thesis. In the 50's and 60's buffett invested in 400 companies total so the majority must be cigar butts. They must all contribute to his overall results, because if he was getting 30-50% a year he cannot have laggards in his portfolio....

 

I'd love to have list of his holdings back then (not just the 5 or 6 mentioned in snowball and other books)

 

There is a chapter one of the editions of Permanent Value authored by Andrew Kirkpatrick that shows a snapshot of the Buffett Partnership holdings in early 1950s. It's a copy of the hand written ledger used by Buffett. There are probably 70 stocks listed with prices and share information. 

[bmichaud]

I agree 100% with the author. I think Munger gets FAR too much credit for converting Buffett to "quality". In his early letters Buffett routinely talked about finding attractive value in industries with favorable outlooks.

[randomep]

 

 

Thanks for the article, but I am not convinced by the thesis. In the 50's and 60's buffett invested in 400 companies total so the majority must be cigar butts. They must all contribute to his overall results, because if he was getting 30-50% a year he cannot have laggards in his portfolio....

 

I'd love to have list of his holdings back then (not just the 5 or 6 mentioned in snowball and other books)

 

There is a chapter one of the editions of Permanent Value authored by Andrew Kirkpatrick that shows a snapshot of the Buffett Partnership holdings in early 1950s. It's a copy of the hand written ledger used by Buffett. There are probably 70 stocks listed with prices and share information.

 

Great! That's exactly what I was looking for! I got a hold the 1994 edition at the library (the author wants me to buy it as 3 kindle parts of $10 each, too greedy!)

 

 

[Tim Eriksen]

 

 

Thanks for the article, but I am not convinced by the thesis. In the 50's and 60's buffett invested in 400 companies total so the majority must be cigar butts. They must all contribute to his overall results, because if he was getting 30-50% a year he cannot have laggards in his portfolio....

 

I'd love to have list of his holdings back then (not just the 5 or 6 mentioned in snowball and other books)

 

There is a chapter one of the editions of Permanent Value authored by Andrew Kirkpatrick that shows a snapshot of the Buffett Partnership holdings in early 1950s. It's a copy of the hand written ledger used by Buffett. There are probably 70 stocks listed with prices and share information.

 

Great! That's exactly what I was looking for! I got a hold the 1994 edition at the library (the author wants me to buy it as 3 kindle parts of $10 each, too greedy!)

 

Good luck.  I have the 1998 edition and it is not in there.  It is my understanding that the book gets larger every year.  Not sure what year the information on the holdings first showed up. I would like to see it myself.

[mn_gophers1]

 

 

Thanks for the article, but I am not convinced by the thesis. In the 50's and 60's buffett invested in 400 companies total so the majority must be cigar butts. They must all contribute to his overall results, because if he was getting 30-50% a year he cannot have laggards in his portfolio....

 

I'd love to have list of his holdings back then (not just the 5 or 6 mentioned in snowball and other books)

 

There is a chapter one of the editions of Permanent Value authored by Andrew Kirkpatrick that shows a snapshot of the Buffett Partnership holdings in early 1950s. It's a copy of the hand written ledger used by Buffett. There are probably 70 stocks listed with prices and share information.

 

Great! That's exactly what I was looking for! I got a hold the 1994 edition at the library (the author wants me to buy it as 3 kindle parts of $10 each, too greedy!)

 

It's probably in the 2008-2010 version or somewhere that timeframe. I can probably send it to you, as I have the pages at home. You might be able to locate the pages on the free book preview on Amazon. 

[randomep]

 

 

Thanks for the article, but I am not convinced by the thesis. In the 50's and 60's buffett invested in 400 companies total so the majority must be cigar butts. They must all contribute to his overall results, because if he was getting 30-50% a year he cannot have laggards in his portfolio....

 

I'd love to have list of his holdings back then (not just the 5 or 6 mentioned in snowball and other books)

 

There is a chapter one of the editions of Permanent Value authored by Andrew Kirkpatrick that shows a snapshot of the Buffett Partnership holdings in early 1950s. It's a copy of the hand written ledger used by Buffett. There are probably 70 stocks listed with prices and share information.

 

Great! That's exactly what I was looking for! I got a hold the 1994 edition at the library (the author wants me to buy it as 3 kindle parts of $10 each, too greedy!)

 

It's probably in the 2008-2010 version or somewhere that timeframe. I can probably send it to you, as I have the pages at home. You might be able to locate the pages on the free book preview on Amazon.

 

Oh dang, I was dreading that, well if you can send me the pages with just the table of holdings I would be grateful.

 

If that is not feasible, can someone give an idea of which page/section that table is in? I ask because the kindle version is broken into 3 parts so I'd like to buy just the part I need.

 

 

[Guest JoelS]

I have the 2014 OPV edition -

 

In the 1957 Partnership letter he talks about the level of the general market..

 

"if the general market were to return to an undervalued status our capital might be employed exclusively in general issues and perhaps some borrowed money would be used in this operation at that time.. conversely, if the market should go considerably higher, our policy will be to reduce our general issues as profits present themselves and increase the workout portfolio.. "…

 

Then he talks specifically about workout/general ratio - given the change in the market..

 

"The market decline has created greater opportunity among undervalued situations so that, generally, our portfolio is heavier in undervalued situations relative to workouts… At the end of 1956, we had a ratio of about 70-30 between generals and workouts.. Now it is about 85-15."

 

My 2c is that it doesn't really matter whether the "generals" were cigar butts or "wonderful companies".. Buffett was concerned about the return in each case.. and he was an expert in weighing up all the factors and identifying return on each outlay - he got better at identifying wonderful companies, with Charlie's help etc.. but he was already very very good at it.

 

It's worth noting that Buffett didn't create this approach to investing - he closely mirrored Ben Graham's operations in weighting holdings in a sort of sliding scale as the market went up and down.. The higher the market went, the more workouts/special situations so as to insulate the portfolio from a general decline.. and more generals when the market as a whole was undervalued so as to participate in the market rise when it came..

[randomep]

I have the 2014 OPV edition -

 

In the 1957 Partnership letter he talks about the level of the general market..

 

"if the general market were to return to an undervalued status our capital might be employed exclusively in general issues and perhaps some borrowed money would be used in this operation at that time.. conversely, if the market should go considerably higher, our policy will be to reduce our general issues as profits present themselves and increase the workout portfolio.. "…

 

Then he talks specifically about workout/general ratio - given the change in the market..

 

"The market decline has created greater opportunity among undervalued situations so that, generally, our portfolio is heavier in undervalued situations relative to workouts… At the end of 1956, we had a ratio of about 70-30 between generals and workouts.. Now it is about 85-15."

 

My 2c is that it doesn't really matter whether the "generals" were cigar butts or "wonderful companies".. Buffett was concerned about the return in each case.. and he was an expert in weighing up all the factors and identifying return on each outlay - he got better at identifying wonderful companies, with Charlie's help etc.. but he was already very very good at it.

 

It's worth noting that Buffett didn't create this approach to investing - he closely mirrored Ben Graham's operations in weighting holdings in a sort of sliding scale as the market went up and down.. The higher the market went, the more workouts/special situations so as to insulate the portfolio from a general decline.. and more generals when the market as a whole was undervalued so as to participate in the market rise when it came..

 

Yes that's all very good points.

 

I think the student (Buffett) was better than the master (Graham) back when the student was 21 or something. Buffett took value investing to the next level. That's his biggest contribution to us common folk.

 

My intention is to get a hold of the OPV, copy that list of 75 stocks, and track down the financials of all those stocks on Moody's or some equivalent and see what he saw in them. Then try to replicate it on the set of all global stocks. Because I believe these stocks still exist, just not in the US but they exist somewhere, in some land far far away....

 

And I find it too hard to find  growth at a reasonable price, I find cigar butts much easier!

[peter1234]

 

Oh dang, I was dreading that, well if you can send me the pages with just the table of holdings I would be grateful.

 

If that is not feasible, can someone give an idea of which page/section that table is in? I ask because the kindle version is broken into 3 parts so I'd like to buy just the part I need.

 

That's what I love about this forum, people trying to save every penny. Truly value conscious!

;)

The good Buffett books are worth every cent, so $30 for the kindle version sounds like a good deal.

:)

[wachtwoord]

The Chinese are selling the hard copy of the 2007 version for $7.18 http://www.aliexpress.com/store/product/Of-Permanent-Value-The-Story-of-Warren-Buffett-2007-InternFree-shipping-ebook-pdf/1178231_1795397087.html (I ordered stuff from aliexpress before and never had problems except that it takes a while to get there).

 

EDIT:

 

Sorry, I misread. Apparently it's epub/mobi/pdf

[Liberty]

I can link you to the 1996 version for free.

 

The Chinese are selling the hard copy of the 2007 version for $7.18 http://www.aliexpress.com/store/product/Of-Permanent-Value-The-Story-of-Warren-Buffett-2007-InternFree-shipping-ebook-pdf/1178231_1795397087.html (I ordered stuff from aliexpress before and never had problems except that it takes a while to get there).

 

I wouldn't recommend buying from a source that infringes on Andrew Kilpatrick's copyright (as I'm pretty sure this PDF is), as he obviously put a lot of work into compiling this book over the years. He also reads this forum, afaik.

[wachtwoord]

The Chinese are selling the hard copy of the 2007 version for $7.18 http://www.aliexpress.com/store/product/Of-Permanent-Value-The-Story-of-Warren-Buffett-2007-InternFree-shipping-ebook-pdf/1178231_1795397087.html (I ordered stuff from aliexpress before and never had problems except that it takes a while to get there).

 

I wouldn't recommend buying from a source that infringes on Andrew Kilpatrick's copyright (as I'm pretty sure this is), as he obviously put a lot of work into compiling this book over the years. He also reads this forum, afaik.

 

Yeah, I initially though ti t was a hard copy (and selling second hand books is legal).

[randomep]

 

 

Hi Folks, please help me here. I am looking at the aforementioned Buffet holdings in 1962. But the handwriting is hard to read (and I may need to get a kindle copy for better resolution), Can anyone tell me what are the following holdings?

 

BCP

TNP

LNC  (I doubt it is Lincoln National Corp because the price is too different)

Murray ??? There are many companies that start with Murray, but Murray what??

 

Thanks!

ps. these are not trivial holdings, all are more than 1% of portfolio.

 

 

[gfp]

I believe TNP was Texas National Petroleum - a merger arbitrage position.

 

EDIT:  yes, here is some more color on this arb:

http://books.google.com/books?id=hOmE143gjMIC&pg=PA93&lpg=PA93&dq=Buffett+Partnership+TNP&source=bl&ots=3GLf55TsfX&sig=aINU_95iYCgqFbO2JlxHg47nIdM&hl=en&sa=X&ei=5Mi1U87KD4-VyAS8moLIBg&ved=0CCsQ6AEwAg#v=onepage&q=Buffett%20Partnership%20TNP&f=false

 

 

 

Hi Folks, please help me here. I am looking at the aforementioned Buffet holdings in 1962. But the handwriting is hard to read (and I may need to get a kindle copy for better resolution), Can anyone tell me what are the following holdings?

 

BCP

TNP

LNC  (I doubt it is Lincoln National Corp because the price is too different)

Murray ??? There are many companies that start with Murray, but Murray what??

 

Thanks!

ps. these are not trivial holdings, all are more than 1% of portfolio.

[OracleofCarolina]

anyone heard of Buffett's thoughts on  United Artists Theatre Circuit in the past?  Buffett apparently bought in Sept 1961 as I have the stock certificate.

[randomep]

I believe TNP was Texas National Petroleum - a merger arbitrage position.

 

EDIT:  yes, here is some more color on this arb:

http://books.google.com/books?id=hOmE143gjMIC&pg=PA93&lpg=PA93&dq=Buffett+Partnership+TNP&source=bl&ots=3GLf55TsfX&sig=aINU_95iYCgqFbO2JlxHg47nIdM&hl=en&sa=X&ei=5Mi1U87KD4-VyAS8moLIBg&ved=0CCsQ6AEwAg#v=onepage&q=Buffett%20Partnership%20TNP&f=false

 

 

thanks yet another book on Buffett I didn't know about

 

 

Hi Folks, please help me here. I am looking at the aforementioned Buffet holdings in 1962. But the handwriting is hard to read (and I may need to get a kindle copy for better resolution), Can anyone tell me what are the following holdings?

 

BCP

TNP

LNC  (I doubt it is Lincoln National Corp because the price is too different)

Murray ??? There are many companies that start with Murray, but Murray what??

 

Thanks!

ps. these are not trivial holdings, all are more than 1% of portfolio.

[mn_gophers1]

LNC Corp was formed from the reorganization of Lehigh Coal & Navigation Co. on May 31, 1962. The total assets acquired had a book value of $32,000,000 subject to debt of $8,800,000. Company issued 2,202,127 shares to Lehigh Coal & Navigation in exchange for assets received under reorganization plan. 

[marodq]

 

Oh dang, I was dreading that, well if you can send me the pages with just the table of holdings I would be grateful.

 

If that is not feasible, can someone give an idea of which page/section that table is in? I ask because the kindle version is broken into 3 parts so I'd like to buy just the part I need.

 

That's what I love about this forum, people trying to save every penny. Truly value conscious!

;)

The good Buffett books are worth every cent, so $30 for the kindle version sounds like a good deal.

:)

 

Hehehe, yeah, although... I did splurge myself with the three kindle books. ;D I think they are the 2010 version. They are big beasts and have still not encountered what you guys are looking for (not even half-way thru book I).

 

I can loan a kindle book from my library for 14 days, so if any of you guys are interested, shoot me with a PM.  ;)

[marodq]

2012 version of OPV. There is no 2014 version that I'm aware of... http://www.andykilpatrick.net/The%20Books.html

 

 

[peter1234]

He released a 2014 edition in paper. Hopefully it will be on kindle soon as well.

:)

http://www.amazon.com/Of-Permanent-Value-Buffett-Endless/dp/157864867X/ref=sr_1_sc_1?ie=UTF8&qid=1404561373&sr=8-1-spell&keywords=kilpatrick+of+permanen+value