Welcome to Becoming Berkshire Episode 10! Today, we're delving into the pivotal year of 1967 for Berkshire Hathaway, a period that marked its transformation into the diversified powerhouse it is today.In 1967, Warren Buffett faced significant challenges in deploying capital. The market environment was changing, with a new generation of money managers emerging, many of whom were far removed from the traumatic experiences of the 1929 Depression. This era saw the rise of figures like Gerald Tsai Jr., known for momentum investing and rapid portfolio turnover, and Fred Carr, a "gunslinger" who preached, "We fall in love with nothing. Every morning, everything is for sale".Buffett found himself increasingly "out of step with present conditions". He noted a sharp diminution in obvious quantitatively based investment bargains and a "hyper-reactive pattern of market behavior" due to a "mushrooming interest in investment performance". His analytical techniques had limited value against this backdrop, and he was skeptical of what he called "fashion" investing, refusing to invest based on anticipating market action rather than business valuations. Furthermore, his capital base had grown to approximately $65 million, making it harder to find suitable investment ideas, and his personal interests dictated a less compulsive approach.It was amidst these challenges that Buffett initiated a profound shift. He began allocating capital outside of the textile business, a decision that would forever change Berkshire's trajectory. The seminal event of 1967 was the acquisition of National Indemnity Company. This strategic purchase was "perhaps the most important event in Berkshire’s history," as it provided a strong platform for future growth and an immediate outlet for the cash freed up from Berkshire’s textile operations.Join us as we explore how these market dynamics, Buffett's changing approach, and this crucial acquisition laid the foundation for Berkshire Hathaway's enduring legacy.
https://open.substack.com/pub/theweekendinvestor/p/becoming-berkshire1967-buffett-and?r=21sroa&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

Welcome to Episode 9 of Becoming Berkshire! As we continue our journey through 1966, a pivotal year for Warren Buffett and Berkshire Hathaway, we're diving deep into one of his most fascinating early investments: his acquisition of 5% of The Walt Disney Company. This period also saw Berkshire Hathaway pay its only dividend of 10 cents per share, signaling Buffett's active exploration of new capital allocation avenues. You'll discover how Buffett's curiosity was piqued by Mary Poppins' theatrical success, leading him to ponder Disney's "Moat" and conduct unconventional due diligence, broadening his definition of "intrinsic value" to include Disney's "off the books" film library.

The year 1966 was marked by a fluctuating stock market, with the Dow Jones Industrial Average briefly breaching the 1,000 mark for the first time before closing significantly lower, while the Buffett Limited Partnership achieved a 20.4% return, outperforming the Dow. During this period, Warren Buffett took control of Berkshire Hathaway and, for the first time, partnered with Charlie Munger on a business venture to acquire the Hochschild, Kohn & Co. department store, an investment that would later be considered a mistake.

https://open.substack.com/pub/theweekendinvestor/p/becoming-berkshire-1966-hochschild?r=21sroa&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

Episode 7 details Warren Buffett's 1965 hostile takeover of Berkshire Hathaway after a tender offer dispute, resulting in his control, chairmanship, and Ken Chace's appointment as president.

https://open.substack.com/pub/theweekendinvestor/p/becoming-berkshire-1965-hostile-takeover?r=21sroa&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

https://open.substack.com/pub/theweekendinvestor/p/becoming-berkshire-1964-buffetts?r=21sroa&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

In 1964, Warren Buffett continued to build his partnership (Buffett Partnership Limited or "BPL"), focusing on investment strategies that included "Generals," "Workouts," and "Controls," while criticizing institutional management for groupthink and advocating for independent, data-driven decisions. Crucially, Buffett's "monumentally stupid decision" not to tender his Berkshire Hathaway shares at $11.375 due to a personal slight over a $0.125 price difference led him to aggressively acquire more shares of the struggling textile manufacturer, eventually resulting in his control of the company.

Welcome to Episode 5 of Becoming Berkshire, as we look at the fascinating story of the American Express salad oil scandal, which almost brought down the New York Stock Exchange (NYSE). We also get to witness the beginning of Buffett’s investment ideology evolving as he starts to be influenced by Charlie Munger.

https://open.substack.com/pub/theweekendinvestor/p/becoming-berkshire-196364-the-american?r=21sroa&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

Explore the world of Warren Buffett's investment strategies in 1963, a year marked by significant historical events. This discussion delves into insights from Buffett's BPL letter, highlighting the extraordinary power of compounding through a compelling example. Discover his framework for identifying investment opportunities, categorized into three main approaches:

1. Generals: This approach focuses on undervalued stocks purchased at bargain prices.

2. Workouts: This strategy capitalizes on predictable outcomes from corporate activities such as mergers.

3. Controls: This involves acquiring a significant percentage of a company's stock.

We also examine Buffett's early involvement with Berkshire Hathaway in 1963, detailing how his purchases transitioned from a 'General' security to a 'Control' position. Finally, we look at how Berkshire navigated challenges and strengthened its balance sheet during this period.

https://open.substack.com/pub/theweekendinvestor/p/becoming-berkshire-1963?r=21sroa&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

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In 1962, Warren Buffett was still investing like a student of Ben Graham, buying cheap, unloved stocks with one last puff left in them.

That year, he took control of Dempster Mill, watched Harry Bottle turn a struggling business into a source of cash, and began buying shares of a dying New England textile company called Berkshire Hathaway.

At the time, Berkshire was just another cigar butt. It was statistically cheap, trading far below book value, but it was also a poor business in a declining industry.

Buffett thought he was buying one more bargain.

Instead, he accidentally began one of the greatest compounding stories in modern financial history.

This episode covers Buffett Partnership, Dempster Mill, the Kennedy Slide, Berkshire Hathaway’s textile roots, and the mistake that became an empire. 

In Issue 2 of Becoming Berkshire, Warren Buffett heads from college life at the University of Pennsylvania to Nebraska, nearly takes a full-time job at JCPenney, gets rejected by Harvard, and then finds the teacher who changes everything: Benjamin Graham.

This episode covers Buffett’s years from 1947 to 1951, his arrival at Columbia, the lessons he learned from Graham, and the three core ideas that became the foundation of his investing life: owning pieces of businesses, using a margin of safety, and treating Mr. Market as your servant, not your master.

Before Warren Buffett became the Oracle of Omaha, he was a numbers-obsessed kid selling gum, Coca-Cola, golf balls, newspapers, and pinball machines while dreaming of a life without a boss. This episode follows Buffett from his Great Depression childhood to his first stock purchase, his early businesses, and the lessons that shaped the investor he would become.