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Warren Buffett's first ever commentary on Berkshire Hathaway $BRK from his partnership letters in 1965-66.
It's incredible to think Berkshire has become a ~$750 billion business.
Here's how it all started. ⬇️
Warren Buffett's first ever commentary on Berkshire Hathaway $BRK from his partnership letters in 1965-66.
It's incredible to think Berkshire has become a ~$750 billion business.
Here's how it all started. ⬇️
1/
"Shares in Berkshire Hathaway had been acquired since November 1962 on much the same line of reasoning as prevailed in the security mentioned above".
"Shares in Berkshire Hathaway had been acquired since November 1962 on much the same line of reasoning as prevailed in the security mentioned above".
2/
"In the case of Berkshire, however, we ended up purchasing enough stock to assume a controlling position ourselves rather than the more usual case of either selling our stock in the market or to another single buyer".
"In the case of Berkshire, however, we ended up purchasing enough stock to assume a controlling position ourselves rather than the more usual case of either selling our stock in the market or to another single buyer".
3/
"Our purchases of Berkshire started at a price of $7.60 per share in 1962. This price partially reflected large
losses incurred by the prior management in closing some of the mills made obsolete by changing conditions
within the textile business".
"Our purchases of Berkshire started at a price of $7.60 per share in 1962. This price partially reflected large
losses incurred by the prior management in closing some of the mills made obsolete by changing conditions
within the textile business".
4/
"In the postwar period the company had slid downhill a considerable distance, having hit a peak in 1948 when about $29 1/2 million was earned before tax and about 11,000 workers were employed. This reflected output from 11 mills".
"In the postwar period the company had slid downhill a considerable distance, having hit a peak in 1948 when about $29 1/2 million was earned before tax and about 11,000 workers were employed. This reflected output from 11 mills".
5/
"We acquired control in spring of 1965, Berkshire was down to two mills and about 2,300 employees. It was a pleasant surprise to find that the remaining units had excellent management personnel, and we have not had to bring a single man from the outside into the operation"
"We acquired control in spring of 1965, Berkshire was down to two mills and about 2,300 employees. It was a pleasant surprise to find that the remaining units had excellent management personnel, and we have not had to bring a single man from the outside into the operation"
6/
"In relation to our beginning acquisition cost of $7.60 per share (the avg. cost, was $14.86 per share, reflecting very heavy purchases in early 1965), the company on Dec 31, 1965, had net working capital alone (before placing any value on the pp&e) of about $19 per share".
"In relation to our beginning acquisition cost of $7.60 per share (the avg. cost, was $14.86 per share, reflecting very heavy purchases in early 1965), the company on Dec 31, 1965, had net working capital alone (before placing any value on the pp&e) of about $19 per share".
7/
"Berkshire is a delight to own. There is no question that the state of the textile industry is the dominant factor in
determining the earning power of the business, but we are most fortunate to have Ken Chace running the
business in a first-class manner"
"Berkshire is a delight to own. There is no question that the state of the textile industry is the dominant factor in
determining the earning power of the business, but we are most fortunate to have Ken Chace running the
business in a first-class manner"
8/
"While a Berkshire is hardly going to be as profitable as Xerox, Fairchild Camera or National Video in a
hypertensed market, it's a comfort able sort of thing to own. As my West Coast philosopher says, “It is
well to have a diet consisting of oatmeal as well as cream puffs.”
"While a Berkshire is hardly going to be as profitable as Xerox, Fairchild Camera or National Video in a
hypertensed market, it's a comfort able sort of thing to own. As my West Coast philosopher says, “It is
well to have a diet consisting of oatmeal as well as cream puffs.”
9/
"Because of our controlling interest, our investment in Berkshire is valued for our audit as a business, not as a
marketable security. If Berkshire advances $5 per share in the market, it does BPL no good - our holdings are
not going to be sold".
"Because of our controlling interest, our investment in Berkshire is valued for our audit as a business, not as a
marketable security. If Berkshire advances $5 per share in the market, it does BPL no good - our holdings are
not going to be sold".
10/
"Similarly, if it goes down $5 per share, it is not meaningful to us. The value of our holding is determined directly by the value of the business. I received no divine inspiration in that valuation of our holdings".
"Similarly, if it goes down $5 per share, it is not meaningful to us. The value of our holding is determined directly by the value of the business. I received no divine inspiration in that valuation of our holdings".
End/
I've spent the last few nights reading Buffett's earliest writings. The commentary on Berkshire was captivating.
Early Buffett was a very different investor than we see today. He was focused on deep-value, workouts/special sits, illiquid small-caps & controlling positions
I've spent the last few nights reading Buffett's earliest writings. The commentary on Berkshire was captivating.
Early Buffett was a very different investor than we see today. He was focused on deep-value, workouts/special sits, illiquid small-caps & controlling positions
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