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Warren Buffett on special situations and activist investing.
Before Buffett became a long-term GARP investor, he was more focused on special sits, illiquid, small-cap, deep value positions. He was even interested in companies he could take control of.
Warren Buffett on special situations and activist investing.
Before Buffett became a long-term GARP investor, he was more focused on special sits, illiquid, small-cap, deep value positions. He was even interested in companies he could take control of.
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Interestingly, Buffett's best returns came during the late 50's to 60's when he had a much different approach to investing.
This thread is a series of quotes from Buffett's 1961 partnership letter where he describes some of the opportunities he is looking for at the time.
Interestingly, Buffett's best returns came during the late 50's to 60's when he had a much different approach to investing.
This thread is a series of quotes from Buffett's 1961 partnership letter where he describes some of the opportunities he is looking for at the time.
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"Our second category of investments consists of 'work-outs.' These are securities whose financial results depend on corporate action rather than supply and demand factors created by buyers and sellers of securities".
"Our second category of investments consists of 'work-outs.' These are securities whose financial results depend on corporate action rather than supply and demand factors created by buyers and sellers of securities".
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"In other words, they are securities with a timetable where we can predict, within reasonable error limits, when we will get how much and what might upset the applecart. Corporate events such as mergers, liquidations, reorganizations, spin-offs, etc.,
lead to work-outs".
"In other words, they are securities with a timetable where we can predict, within reasonable error limits, when we will get how much and what might upset the applecart. Corporate events such as mergers, liquidations, reorganizations, spin-offs, etc.,
lead to work-outs".
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"An important source in recent years has been sell-outs by oil producers to major integrated oil companies".
"This category will produce reasonably stable earnings from year to year, to a large extent irrespective of the
course of the Dow".
"An important source in recent years has been sell-outs by oil producers to major integrated oil companies".
"This category will produce reasonably stable earnings from year to year, to a large extent irrespective of the
course of the Dow".
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"Obviously, if we operate throughout a year with a large portion of our portfolio in workouts, we will look extremely good if it turns out to be a declining year for the Dow or quite bad if it is a strongly advancing year"
"Obviously, if we operate throughout a year with a large portion of our portfolio in workouts, we will look extremely good if it turns out to be a declining year for the Dow or quite bad if it is a strongly advancing year"
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"Over the years, work-outs have provided our second largest category. At any given time, we may be in ten to fifteen of these; some just beginning and others in the late stage of their development".
"Over the years, work-outs have provided our second largest category. At any given time, we may be in ten to fifteen of these; some just beginning and others in the late stage of their development".
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"The final category (of investments) is 'control' situations where we either control the company or take a very large position and attempt to influence policies of the company. Such operations should definitely be measured on the basis of several years".
"The final category (of investments) is 'control' situations where we either control the company or take a very large position and attempt to influence policies of the company. Such operations should definitely be measured on the basis of several years".
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"In a given year, they may produce nothing as it is usually to our advantage to have the stock be stagnant market-wise for a long period while we are acquiring it. These situations, too, have relatively little in common with the behavior of the Dow".
"In a given year, they may produce nothing as it is usually to our advantage to have the stock be stagnant market-wise for a long period while we are acquiring it. These situations, too, have relatively little in common with the behavior of the Dow".
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"Sometimes, we buy into a general with the thought in mind that it might develop into a control situation. If the price remains low enough for a long period, this might very well happen".
"Sometimes, we buy into a general with the thought in mind that it might develop into a control situation. If the price remains low enough for a long period, this might very well happen".
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"If it moves up before we have a substantial percentage of the company's stock, we sell at higher levels and complete a successful general operation".
"If it moves up before we have a substantial percentage of the company's stock, we sell at higher levels and complete a successful general operation".
End/
During this time period of a different approach to investing, Buffett's annual compounded return for the partnership was 29% over a 10yr period from 1957-1966, compared to Dow's annual return of 9.7%. Buffett's cumulative results were 1029% vs. 141% for the Dow.
During this time period of a different approach to investing, Buffett's annual compounded return for the partnership was 29% over a 10yr period from 1957-1966, compared to Dow's annual return of 9.7%. Buffett's cumulative results were 1029% vs. 141% for the Dow.
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