Thread by @hkeskiva

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One of my favorite ways to learn is to backward-engineer famous investments, especially Warren Buffett’s.

This thread gathers BUFFETT’S INVESTMENTS from the past decades, providing “tweet-sized” information on each one.

Best enjoyed with a cup of tea 🫖

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Disclosure: The first patch will be in chronological order, but later ones added as they come.

There are so many cases that I am sure to miss some. Thanks in advance for letting me know what I missed and pointing out any errors there may be.

With this, let’s begin 😊

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In 1942 at the ripe age of 11, Warren Buffett invested his life savings of $114.75 ($2,100 in 2021 dollars).

His first ever purchase was three preferred shares of Cities Services (today Citgo), later acquired by Occidental Petroleum, now owned by Petroleos de Venezuela.

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In 1959, Buffett Partnership allocated 35% of net worth to Sanborn Map, provider of detailed infrastructure maps.

It was a balance sheet play – high certainty and conviction.

-Market cap $5 mln ($45/sh)
-Marketable securities $7 mln ($65/sh)
-Earnings $0.1 mln ($1/sh)

5/🧵

Less-known venture capital type of a deal to Mid-Continent Tab Card Company in 1961.

-Valuation $0.375 mln
-$1 mln sales
-70%+ growth
-36% profit margin
-Invested $60k or 20% of his personal net worth

h/t @DividendGrowth

Alice Schroeder:

6/🧵

Dempster Mill was Buffett Partnership success from 1962, a balance sheet play with little to no earnings power. Star manager, Harry Bottle, had a lot to do with the outcome.

Key figures:
-Average cost $28/share
-Estimated fair value $35/share
-Sold at $80/share in 1963

7/🧵

In his early years, Buffett bought a share of Delta Duck Club – a hunting ground that proved to be a lucrative oil & gas field.

Figures:
-Share price $29,000
-Excess cash $20,000
-EBIT $11,000
-Earnings $7,000
-P/E 4.1
-EV/EBIT 0.8

buffett.cnbc.com/video/1995/05/…

8/🧵

In 1972, Berkshire bought See’s Candies (required capital from the free float of Blue Chip Stamps).

-Price $25 mln
-Sales $30 mln
-Net tangible assets $8 mln
-EBIT $4.2 mln
-Net income $2 mln
-P/E 12.5
-EV/EBIT 6
-Interest rate 6.2%

d2wsh2n0xua73e.cloudfront.net/wp-content/upl…

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In 1973, Buffett bought $10.6 mln worth of Washington Post stock and joined its board.

-Market cap $80 mln
-Net income $13.3 mln
-P/E 6
-ROE 15.7%
-Interest rate 6.8%

Buffett thought it was worth $400 mln or more.

berkshirehathaway.com/letters/1985.h…

csinvesting.org/wp-content/upl…

10/🧵

Between 1976 and 1980, Berkshire bought $47 mln (7.2 mln shares) worth of then-struggling insurance company GEICO.

GEICO in 1980:
-Market cap $296 mln
-Revenues $705 mln
-Earnings $60 mln
-ROE 30%
-P/E 5

11/🧵

In 1983, Berkshire Hathaway acquired 90% of Nebraska Furniture Mart from the legendary Rose Blumkin, “Mrs. B”.

-Price paid $60.5 mln
-Sales $100 mln
-EBIT $7 mln
-Net income $4.5 mln
-EV/EBIT 14.2
-P/E 22.2

berkshirehathaway.com/letters/1984.h…

buffett.cnbc.com/video/2014/05/…

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In 1985, Buffett invested $516 mln in news and media business Capital Cities/ABC – his largest at the time and later to be turned to Disney stock via acquisition.

1984:
-Market value $2,760 mln
-Earnings $200 mln
-P/E 13.8

chicagotribune.com/news/ct-xpm-19…

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In 1989, Berkshire invested $358 mln in USAir. “My name is Warren and I'm an airoholic”

-Valuation $2,3 bln
-Net income $174 mln (avg. for 1984-86)
-P/E 13.2
-Pref. dividend 9.25%
-Interest rates 8.5%

berkshirehathaway.com/letters/1989.h…

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Although a Pepsi fan in his 20s, Buffett’s purchases in 1988-1989 made Coke the largest Berkshire investment at $1 bln (35% of portfolio).

1988:
-Market cap $15 bln
-Earnings $1 bln
-ROE 33%
-P/E 15
-Interest rate 8.8%

gurufocus.com/news/205476/re…

h/t @TSOH_Investing

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In 1989, Berkshire Hathaway bought $600 million (11% stake) of razor-blade manufacturer Gillette.

For 1988 (1989):
-Market value $5.5 bln
-Sales $3.6 (3.8) bln
-Net income $269 (285) mln
-P/E 20
-8.75% pref. div.

berkshirehathaway.com/letters/1989.h…
apnews.com/article/db0be6…

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Wells Fargo was struggling with California real estate market in 1989, triggering Buffett to initiate a position in this traditional U.S. bank.

In 1990:
-Market cap $3 bln
-Earnings $600 mln
-P/E 5
-Interest rate 8.6%

h/t @RobertGHagstrom for the caption

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In 1991, Buffett made its first major foreign investment in the global stout market by buying $325 mln worth of Guinness’ stock.

1991:
-Market value £9.4 bln
-Net income £636 mln
-P/E 14.8

h/t @RobertGHagstrom for the figures in caption

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By March 1995, Berkshire had acquired nearly 10% of American Express $AXP.

Figures in 1994:
-Market cap $13 bln
-Earnings $1.4 bln
-P/E 9.3
-Interest rate 5.9%

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In 1996, Berkshire bought FlightSafety, world's leader in the training of pilots.

-Price paid $1.5 bln
-Revenues $326 mln
-EBIT $117 mln
-Net income $85 mln
-P/E 17.6
-Interest rate 6.4%

berkshirehathaway.com/letters/1996.h…

theoraclesclassroom.com/wp-content/upl…

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In 1997, fast-food franchise International Dairy Queen became part of Berkshire.

-Price paid $588 mln
-Sales $412 mln
-EBIT $55.3 mln
-Net income $34.4 mln
-P/E 17.1
-Interest rates 6.4%

h/t @brkstudent’s book

berkshirehathaway.com/letters/1997.h…
sec.report/Document/00008…

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In 2000, Berkshire acquired Benjamin Moore Paint, a manufacturer of architectural and industrial coatings.

At the time of acquisition:
-Valuation $1 bln
-Sales $780 mln
-EBIT $137 mln
-Net income $78 mln
-P/E 12.8
-Interest rates 6.0%

sec.report/Document/00009…

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In 2000, Berkshire bought Justin Industries, parent of Justin (footwear) and Acme (building materials).

Figures:
-Price $570 mln
-Sales $510 mln
-EBIT $45 mln
-Net income $28 mln
-P/E 20.4
-Interest rates 6.0%

berkshirehathaway.com/letters/2000pd…

sec.report/Document/00000…

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In the aftermath of 2000 tech boom, Berkshire bought majority of carpet maker Shaw Industries for $19 a share.

Figures:
-Valuation $2.66 bln
-Sales $4.1 bln
-Net income $228 mln
-P/E 11.7
-Interest rate 6.0%

money.cnn.com/2000/09/06/dea…
sec.report/Document/00000…

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In 2001, Berkshire acquired Johns Manville, provider of insulation and roofing systems.

Financials for 1999:
-Price paid $1.8 bln
-Sales $2.2 bln
-EBIT $352 mln
-Net income $256
-P/E 7.0
-Interest rates 5.0%

theoraclesclassroom.com/wp-content/upl…

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In 2002 and 2003, Berkshire bought 1.3% of PetroChina for $488 mln.

PetroChina in 2001:
-Market price $37 bln
-Revenues $28.9 bln
-EBIT $8.7 bln
-Net income $5.7 bln
-P/E 6.5
-Long-term interest rates 4.6%

sec.report/Document/00011…
berkshirehathaway.com/letters/2007lt…

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In 2007, Buffett bought $3.2 bln worth of 2nd largest U.S. railroad Burlington Northern Santa Fe (bought in full in 2009).

-Market price $30 bln
-EV $37 bln
-Revenues $15 bln
-EBIT $3.5 bln
-Net income $1.9 bln
-EV/EBIT 10.6
-P/E 15.8

bnsf.com/about-bnsf/fin…

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In 2008, Berkshire bought 10% stake in Chinese EV producer BYD. Founder Wang Chuanfu “combination of Thomas Edison and Jack Welch”.

(USD/RMB 7.6)
-Valuation $2.3 bln
-Revenue $2.8 bln
-Net income $220 mln
-P/E 10.5
-Interest rate 3.7%

www1.hkexnews.hk/listedco/listc…

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Having long avoided tech companies, Buffett made $10.9 bln bet on $IBM in 2011, or 64 mln shares at an avg price of $170/sh (EV $187/sh).

$IBM:
-Revenue $77.6/sh
-EBIT $15.6/sh
-Earnings $11.5/sh
-EV/EBIT 12
-P/E 14.8
-Interest rate 2.8%

berkshirehathaway.com/letters/2011lt…

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In 2011, Buffett bought a specialty chemical company Lubrizol.

At the time of investment:
-Price $9.7 bln
-Revenues $5.4 bln
-EBIT $1 bln
-Earnings $0.7 bln
-P/E 13.9
-EV/EBIT 9.7
-Interest rate 2.8%

Lubrizol 10-K:
sec.gov/Archives/edgar…

30/🧵

In 2013, 3G Capital and Berkshire bought together the iconic household name H.J. Heinz Company, Berkshire being the financing partner.

At the time of acquisition:
-Price paid $23 bln
-Sales $11.6 bln
-Net income $923 mln
-P/E 24.9
-Interest rate 2.4%
-9% pref. div.

31/🧵

After learning from $IBM mistake, Buffett changed ships to one with a wider moat, and plowed $36 bln into Apple $AAPL shares in 2016-2018.

Figures in 2016:
-Market cap $603 bln
-Earnings $46 bln
-P/E 13.1
-EV/EBIT 10
-Interest rate 1.8%

berkshirehathaway.com/letters/2020lt…

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In 2016, Buffett paid $32.1 billion to buy aircraft and industrial parts maker Precision Castparts.

Figures in 2015:
-Sales $10 bln
-EBIT $2.5 bln
-Net income $1.5 bln
-EV/EBIT 12.8
-P/E 21.4
-Interest rate 5.3%

2015 annual report: sec.gov/Archives/edgar…

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The presented deals are coupled with the prevailing interest rates at the time of acquisition. For these figures, I’ve used Shiller’s monthly data series: econ.yale.edu/~shiller/data/…

Although far from a perfect setup, here’s how P/E and rates stack up on a scatter.

34/🧵

This was thread of Buffett’s purchases - thanks for making it this far!

Credits:

@ChrisBloomstran: Semper Augustus $BRK coverage (semperaugustus.com/clientletter)

@RobertGHagstrom: The Warren Buffett Way

@BRK_Student: The Complete Financial History of Berkshire Hathaway

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If you enjoyed this thread, please like/RT the first post. For more similar content, hit a follow @hkeskiva.

You may also find my earlier threads on business and investing from this "meta-thread" of threads.

Wishing you all relaxing weekend! 🙂🙏

36/🧵

As promised, I'll keep adding deals still missing from this list - thanks for all the great inputs received so far.

Once done with the quite extensive pipeline, we reiterate an overview of the deals against extended list of 'opportunity costs':

- T-bills
- bonds
- SP500

37/🧵

In 2006, Buffett made his first foreign (majority) acquisition by purchasing 80% of an Israeli cutting-tool business ISCAR.

- Valuation $5 bln
- Sales $1.4 bln
- Net income $440 mln
- P/E 11.4
- Interest rate 4.8%

berkshirehathaway.com/letters/2006lt…

bloomberg.com/news/articles/…

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In 2007, $BRK acquired 60% of private Marmon (products from railroad tank cars to cables).

- Valuation $7.5 bln
- Sales $7 bln
- EBIT $868 mln
- Net income $642 mln (26% tax assumed)
- P/E 11.7
- Interest rates 4.6%

berkshirehathaway.com/letters/2007lt…

industryweek.com/leadership/com…

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Story of Berkshire Hathaway started in 1965, when Buffett took over the struggling New England textile maker.

- Avg. price $14.86/sh
- Net working cap $19/sh
- EBIT $4.08/sh
- Net income $2.11/sh
- P/E 7
- int. rate 4.3%

investorsfriend.com/why-warren-buf…

berkshirehathaway.com/letters/1995.h…

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In 1998, Berkshire acquired Executive Jet, marketer of fractional ownership in aircraft with 75% market share.

- Price $725 mln
- Sales $900 mln
- EBIT $98 mln (est)
- Net income $62 mln (est)
- P/E 11.7
- Int. rate 5.3%

berkshirehathaway.com/1998ar/1998ar.…

arena-attachments.s3.amazonaws.com/866910/37bb0e4…

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In 1986, Scott & Fetzer, a conglomerate selling vacuum cleaners and Encyclopedias, among other things, joined Berkshire family.

- Price $315 mln, EV $410 mln
- Sales $677 mln
- EBIT $67 mln
- Net income $40
- EV/EBIT 6.1
- P/E 7.9
- Int. rate 7.7%

berkshirehathaway.com/letters/1986.h…

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In 1967, Buffett bought Omaha-based insurance company National Indemnity.

- Price paid $8.6 mln
- Tangible net worth $6.7 mln
- Float $19.4 mln
- Net income $1.4 mln ($0.4 mln avg last decade)
- P/E 6.1
- Int. rate 5.1%

enterprising-investor.com/national-indem…

fool.com/investing/2019…

43/🧵

Acquisition of reinsurer General Re in 1998 provided Buffett with a pool of investable capital.

- Price $22 bln (in $BRK stock)
- Float $14.9 bln
- Added investments $24 bln
- Net income $968 mln
- P/E 22.7
- Int.rate 5.3%

berkshirehathaway.com/news/jun1998.h…
berkshirehathaway.com/letters/final1…

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In 1992, Buffett bought $312 mln (14.9%) of General Dynamics $GD, leader in marine and aerospace industries.

- Price $ 2.1 bln (EV $1.9 bln)
- Sales $8.8 bln
- EBIT $392 mln
- Net income $505 mln
- P/S 0.24
- EV/EBIT 4.8
- P/E 4.2
- Int. rate 7.0%

berkshirehathaway.com/letters/1992.h…

45/🧵

Buffett added Clayton Homes, a manufactured-housing company, to Berkshire family in 2003.

- Price $1.7 bln
- Sales $1.2 bln
- EBIT $201 mln
- Net income $124 mln
- EV/EBIT 8.5
- P/E 13.7
- Interest rate 4.0%

berkshirehathaway.com/news/apr0103.p…
sec.report/Document/00007…

46/🧵

The notorious Dexter Shoes was acquired by Berkshire in 1993.

- Price $420.5 mln (in $BRK stock)
- EBIT $36.4 mln (est)
- Net income $23.4 mln (est, 35% tax assumed)
- EV/EBIT 11.6
- P/E 18.0
- Interest rates 5.9%

berkshirehathaway.com/1995ar/1995ar.…
berkshirehathaway.com/letters/1993.h…

47/🧵

Buffett first bought Blue Chip Stamps 1967-70, later (1983) merged into Berkshire.

- Price $40 mln
- Sales $132 mln
- Cash, securities $113 mln
- Float $86 mln
- EBIT $15 mln
- Net income $7 mln
- P/E 5.7
- Int. rates 7.3%

theoraclesclassroom.com/wp-content/upl…

gurufocus.com/news/543005/be…

48/🧵

In 1954, 24yo Buffett had arbitrage opportunity with Rockwood Cocoa Beans.

- shares traded at $34
- shares exchanged for $36 worth cocoa beans (80 lbs) for $2 arb/sh
- Buffett bought 222 shares, made eventually $13,000

berkshirehathaway.com/letters/1988.h…

gurufocus.com/news/1017023/a…

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In 1996, 4.3% of McDonald's $MCD spent brief time with Berkshire. "My decision to sell McDonald’s was a very big mistake"

- Price $29.4 bln
- Sales $9.8 bln
- EBIT $2.6 bln
- Net income $1.4 bln
- P/E 21
- Int. rates 6.4%

mcdonalds.com/content/dam/Ab…

berkshirehathaway.com/letters/1996.h…

50/🧵

In 1973, float from Blue Chip Stamps was used by Berkshire Hathaway to buy 80% of Wesco Financial.

- Price $31.2 mln ($25 mln for 80%)
- Investment income $28.1 mln
- Net income $4.3 mln
- P/E 7.3
- Int. rates 6.8%

theoraclesclassroom.com/wp-content/upl…

51/🧵

In 2005, Berkshire Hathaway bought 5.6% of Anheuser Busch, major beer brewer 🍻 Skål!

- Price paid $38.1 bln
- Sales $14.9 bln
- EBIT $3.4 bln
- Net income $2.2 bln
- P/E 17.3
- Interest rates 4.3%

berkshirehathaway.com/letters/2005lt…

sec.report/Document/00010…

52/🧵

In 1995, Berkshire Hathaway bought RC Willey Home Furnishings that accounted for over 50% of the furniture business in Utah.

- Price $175 mln
- Sales $257 mln
- Earnings $16 mln (estimate extrapolated from 6m results)
- P/E 11
- Int. rates 6.6%

berkshirehathaway.com/letters/1995.h…

53/🧵

In 1995, Berkshire Hathaway bought jeweler called Helzberg’s to be added to their Jewelry category.

- Price not disclosed
- Sales $282 mln
- Earnings $31 mln (assuming Tiffany’s net margin of ~11%)
- Interest rates 6.6%

berkshirehathaway.com/letters/1995.h…
netcials.com/financial-net-…

54/🧵

In 2020, Berkshire Hathaway started aggressive share repurchases exceeding operating earnings (reaching annualized $29 bln in 3Q2021).

- Price (excl. 3Q2021 equity portfolio) ~$200 bln
- Net operating income (excl. inv. income) ~$20 bln
- P/E 10
- Interest rate 1.1%

55/🧵

In March 2022, Buffett bought insurance company Alleghany $Y after following the company for 60 years.

- Price $11.6 bln
- Equity $9.2 bln
- Float $13.1 bln
- Net income $1.1 bln
- P/E 10
- P/B 1.3
- P/float 0.9
- P/(Equity+ float) 0.5
- Interest rates 1.5%