Warren Edward Buffett (pronounced /?b?f?t/; born August 30, 1930) is an American business magnate, investor, and philanthropist. He is widely regarded as one of the most successful investors in the world. Often introduced as "legendary investor, Warren Buffett",he is the primary shareholder, chairman and CEO of Berkshire Hathaway.Sony VAIO VPCZ119FJ/S Battery
He is consistently ranked among the world's wealthiest people. He was ranked as the world's wealthiest person in 2008 and is the third wealthiest person in the world as of 2011.
Buffett is called the "Wizard of Omaha", "Oracle of Omaha" or the "Sage of Omaha" and is noted for his adherence to the value investing philosophy and for his personal frugality despite his immense wealth.Sony VAIO VPCZ119GC/X Battery
Buffett is also a notable philanthropist, having pledged to give away 99 percent of his fortune to philanthropic causes, primarily via the Gates Foundation. He also serves as a member of the board of trustees at Grinnell College.
Buffett was born in 1930 in Omaha, Nebraska, the second of three children and only son of U.S.Sony VAIO VPCZ119L Battery
Representative Howard Buffett,a fierce critic of the interventionist New Deal domestic and foreign policy, and his wife Leila (née Stahl). Buffett began his education at Rose Hill Elementary School in Omaha. In 1942, his father was elected to the first of four terms in the United States Congress,Sony VAIO VPCZ119R/B Battery
and after moving with his family to Washington, D.C., Warren finished elementary school, attended Alice Deal Junior High School, and graduated from Woodrow Wilson High School in 1947, where his senior yearbook picture reads: "likes math; a future stock broker."Sony VAIO VPCZ119R/S Battery
Even as a child, Buffett displayed an interest in making and saving money. He went door to door selling chewing gum, Coca-Cola, or weekly magazines. For a while, he worked in his grandfather's grocery store. While still in high school he was successful in making money by delivering newspapers, selling golfballs and stamps, and detailing cars, among other means. Sony VAIO VPCZ11AFJ Battery
Filing his first income tax return in 1944, Buffett took a $35 deduction for the use of his bicycle and watch on his paper route. In 1945, in his sophomore year of high school, Buffett and a friend spent $25 to purchase a used pinball machine, which they placed in the local barber shop. Within months, they owned several machines in different barber shops.Sony VAIO VPCZ11AGJ Battery
Buffett's interest in the stock market and investing also dated to his childhood, to the days he spent in the customers' lounge of a regional stock brokerage near the office of his father's own brokerage company. On a trip to New York City at the age of ten, he made a point to visit the New York Stock Exchange. Sony VAIO VPCZ11AVJ Battery
At the age of 11, he bought three shares of Cities Service Preferred for himself, and three for his sister.While in high school he invested in a business owned by his father and bought a farm worked by a tenant farmer. By the time he finished college, Buffett had accumulated more than $90,000 in savings measured in 2009 dollars.Sony VAIO VPCZ11CGX/X Battery
Buffett entered college as a freshmen in 1947 at the Wharton Business School of the University of Pennsylvania and studied there for two years from 1947 to 1949. In the year 1950, when he entered his junior year, he transferred to the University of Nebraska–Lincoln where at the age of nineteen, he graduated with a Bachelor of Science in business administration.Sony VAIO VPCZ11DGX/SJ Battery
After the completion of his undergraduate studies, Buffett enrolled at Columbia Business School after learning that Benjamin Graham (author of "The Intelligent Investor" – one of his favorite books on investing) and David Dodd, two well-known securities analysts, taught there.Sony VAIO VPCZ11FHX/XQ Battery
He earned a Master of Science in economics from Columbia in 1951. Buffett also attended the New York Institute of Finance. In Buffett’s own words:
I’m 15 percent Fisher and 85 percent Benjamin Graham.Sony VAIO VPCZ11V9R/B Battery
The basic ideas of investing are to look at stocks as business, use the market's fluctuations to your advantage, and seek a margin of safety. That’s what Ben Graham taught us. A hundred years from now they will still be the cornerstones of investing.Sony VAIO VPCZ11X9E/B Battery
Warren Buffett was employed from 1951–54 at Buffett-Falk & Co., Omaha as an investment salesman, from 1954–1956 at Graham-Newman Corp., New York as a securities analyst, from 1956–1969 at Buffett Partnership, Ltd., Omaha as a general partner and from 1970 – Present at Berkshire Hathaway Inc, Omaha as its Chairman, CEO.Sony VAIO VPCZ11Z9E/B Battery
In 1950, at the age of 20, Buffett had made and saved $9,800. In April 1952, Buffett discovered Graham was on the board of GEICO insurance. Taking a train to Washington, D.C. on a Saturday, he knocked on the door of GEICO's headquarters until a janitor allowed him in. Sony VAIO VPCZ125GX/S Battery
There he met Lorimer Davidson, Geico's Vice President, and the two discussed the insurance business for hours. Davidson would eventually become Buffett's life-long friend and a lasting influence and later recall that he found Buffett to be an "extraordinary man" after only fifteen minutes. Sony VAIO VPCZ127FC Battery
Buffett graduated from Columbia and wanted to work on Wall Street, however, both his father and Ben Graham urged him not to. He offered to work for Graham for free, but Graham refused.
Buffett returned to Omaha and worked as a stockbroker while taking a Dale Carnegie public speaking course.Sony VAIO VPCZ128GC Battery
Using what he learned, he felt confident enough to teach an "Investment Principles" night class at the University of Nebraska-Omaha. The average age of his students was more than twice his own. During this time he also purchased a Sinclair Texaco gas station as a side investment. However, this did not turn out to be a successful business venture.Sony VAIO VPCZ12M9E/B Battery
In 1952 Buffett married Susan Thompson at Dundee Presbyterian Church and the next year they had their first child, Susan Alice Buffett. In 1954, Buffett accepted a job at Benjamin Graham's partnership. His starting salary was $12,000 a year (approximately $97,000 adjusted to 2008 dollars). Sony VAIO VPCZ13M9E/B Battery
There he worked closely with Walter Schloss. Graham was a tough man to work for. He was adamant that stocks provide a wide margin of safety after weighting the trade-off between their price and their intrinsic value. The argument made sense to Buffett but he questioned whether the criteria were too stringent and caused the company to miss out on big winners that had more qualitative values. Sony VAIO VPCZ13V9E/X Battery
That same year the Buffetts had their second child, Howard Graham Buffett. In 1956, Benjamin Graham retired and closed his partnership. At this time Buffett's personal savings were over $174,000 ($1.2 million inflation adjusted to 2009 dollars) and he started Buffett Partnership Ltd., an investment partnership in Omaha.Sony VAIO VPCZ13Z9E/X Battery
In 1957, Buffett had three partnerships operating the entire year. He purchased a five-bedroom stucco house in Omaha, where he still lives, for $31,500. In 1958 the Buffett's third child, Peter Andrew Buffett, was born. Buffett operated five partnerships the entire year. Sony VAIO VPCZZZHJ Battery
In 1959, the company grew to six partnerships operating the entire year and Buffett was introduced to Charlie Munger. By 1960, Buffett had seven partnerships operating: Buffett Associates, Buffett Fund, Dacee, Emdee, Glenoff, Mo-Buff and Underwood.Sony VAIO VPZ117 Battery
He asked one of his partners, a doctor, to find ten other doctors willing to invest $10,000 each in his partnership. Eventually eleven agreed, and Buffett pooled their money with a mere $100 original investment of his own. In 1961, Buffett revealed that Sanborn Map Company accounted for 35% of the partnership's assets.Sony VAIO VPZ118 Battery
He explained that in 1958 Sanborn stock sold at only $45 per share when the value of the Sanborn investment portfolio was $65 per share. This meant that buyers valued Sanborn stock at "minus $20" per share and were unwilling to pay more than 70 cents on the dollar for an investment portfolio with a map business thrown in for nothing.Sony VAIO VPZ119 Battery
This earned him a spot on the board of Sanborn.
As a millionaire
In 1962, Buffett became a millionaire because of his partnerships, which in January 1962 had an excess of $7,178,500, of which over $1,025,000 belonged to Buffett. Buffett merged all partnerships into one partnership.Sony VPCM11M1E/B Battery
Buffett invested in and eventually took control of a textile manufacturing firm, Berkshire Hathaway. Buffett's partnerships began purchasing shares at $7.60 per share. In 1965, when Buffett's partnerships began purchasing Berkshire aggressively, they paid $14.86 per share while the company had working capital of $19 per share. Sony VPCM11M1E/W Battery
This did not include the value of fixed assets (factory and equipment). Buffett took control of Berkshire Hathaway at the board meeting and named a new president, Ken Chace, to run the company. In 1966, Buffett closed the partnership to new money. Sony VPCM12M1E/L Battery
Buffett wrote in his letter: "... unless it appears that circumstances have changed (under some conditions added capital would improve results) or unless new partners can bring some asset to the partnership other than simply capital, I intend to admit no additional partners to BPL."Sony VPCM12M1E/P Battery
In a second letter, Buffett announced his first investment in a private business — Hochschild, Kohn and Co, a privately owned Baltimore department store. In 1967, Berkshire paid out its first and only dividend of 10 cents. In 1969, following his most successful year, Buffett liquidated the partnership and transferred their assets to his partners.Sony VPCM12M1E/W Battery
Among the assets paid out were shares of Berkshire Hathaway. In 1970, as chairman of Berkshire Hathaway, Buffett began writing his now-famous annual letters to shareholders. However, he lived solely on his salary of $50,000 per year, and his outside investment income. Sony VPCM13M1E/L Battery
In 1979, Berkshire began the year trading at $775 per share, and ended at $1,310. Buffett's net worth reached $620 million, placing him on the Forbes 400 for the first time.
In 1973, Berkshire began to acquire stock in the Washington Post Company. Sony VPCM13M1E/P Battery
Buffett became close friends with Katharine Graham, who controlled the company and its flagship newspaper, and became a member of its board of directors. In 1974, the SEC opened a formal investigation into Warren Buffett and Berkshire's acquisition of WESCO, due to possible conflict of interest. No charges were brought. Sony VPCM13M1E/W Battery
In 1977, Berkshire indirectly purchased the Buffalo Evening News for $32.5 million. Antitrust charges started, instigated by its rival, the Buffalo Courier-Express. Both papers lost money, until the Courier-Express folded in 1982.
In 1979, Berkshire began to acquire stock in ABC.Sony VAIO VGN-Z11MN/B Battery
Capital Cities announced $3.5 billion purchase of ABC on March 18, 1985 surprised the media industry, as ABC was four times bigger than Capital Cities at the time. Berkshire Hathaway chairman Warren Buffett helped finance the deal in return for a 25% stake in the combined company.Sony VAIO VGN-Z11VN/X Battery
The newly merged company, known as Capital Cities/ABC (or CapCities/ABC), was forced to sell off some stations due to FCC ownership rules. Also, the two companies owned several radio stations in the same markets.
In 1987, Berkshire Hathaway purchased a 12% stake in Salomon Inc., making it the largest shareholder and Buffett the director.Sony VAIO VGN-Z11WN/B Battery
In 1990, a scandal involving John Gutfreund (former CEO of Salomon Brothers) surfaced. A rogue trader, Paul Mozer, was submitting bids in excess of what was allowed by the Treasury rules. When this was discovered and brought to the attention of Gutfreund, he did not immediately suspend the rogue trader. Sony VAIO VGN-Z11XN/B Battery
Gutfreund left the company in August 1991.Buffett became Chairman of Salomon until the crisis passed; on September 4, 1991, he testified before Congress.In 1988, Buffett began buying stock in Coca-Cola Company, eventually purchasing up to 7% of the company for $1.02 billion. It would turn out to be one of Berkshire's most lucrative investments, and one which it still holds.Sony VAIO VGN-Z15 Battery
As a billionaire
Buffett became a billionaire on paper when Berkshire Hathaway began selling class A shares on May 29, 1990, when the market closed at $7,175 a share. In 1998, in an unusual move, he acquired General Re (Gen Re) for stock. Sony VAIO VGN-Z15N Battery
In 2002, Buffett became involved with Maurice R. Greenberg at AIG, with General Re providing reinsurance. On March 15, 2005, AIG's board forced Greenberg to resign from his post as Chairman and CEO under the shadow of criticism from Eliot Spitzer, former attorney general of the state of New York. Sony VAIO VGN-Z17 Battery
On February 9, 2006, AIG and the New York State Attorney General's office agreed to a settlement in which AIG would pay a fine of $1.6 billion.In 2010, the federal government settled with Berkshire Hathaway for $92 million in return for the firm avoiding prosecution in an AIG fraud scheme, and undergoing 'corporate governance concessions'.Sony VAIO VGN-Z17N Battery
In 2002, Buffett entered in $11 billion worth of forward contracts to deliver U.S. dollars against other currencies. By April 2006, his total gain on these contracts was over $2 billion. In 2006, Buffett announced in June that he gradually would give away 85% of his Berkshire holdings to five foundations in annual gifts of stock, starting in July 2006.Sony VAIO VGN-Z19 Battery
The largest contribution would go to the Bill and Melinda Gates Foundation.In 2007, in a letter to shareholders, Buffett announced that he was looking for a younger successor, or perhaps successors, to run his investment business.Buffett had previously selected Lou Simpson, who runs investments at Geico, to fill that role. However, Simpson is only six years younger than Buffett.Sony VAIO VGN-Z19N Battery
Late 2000s recession
Buffett ran into criticism during the subprime crisis of 2007–2008, part of the late 2000s recession, that he had allocated capital too early resulting in suboptimal deals. “Buy American. I am.” he wrote for an opinion piece published recently in the New York Times.Sony VAIO VGN-Z21MN/B Battery
Buffett has called the 2007—present downturn in the financial sector "poetic justice". Buffett's Berkshire Hathaway suffered a 77% drop in earnings during Q3 2008 and several of his recent deals appear to be running into large mark-to-market losses.Sony VAIO VGN-Z21VN/X Battery
Berkshire Hathaway acquired 10% perpetual preferred stock of Goldman Sachs. Some of Buffett's Index put options (European exercise at expiry only) that he wrote (sold) are currently running around $6.73 billion mark-to-market losses.Sony VAIO VGN-Z21WN/B Battery
The scale of the potential loss prompted the SEC to demand that Berkshire produce, "a more robust disclosure" of factors used to value the contracts. Buffett also helped Dow Chemical pay for its $18.8 billion takeover of Rohm & Haas. He thus became the single largest shareholder in the enlarged group with his Berkshire Hathaway,Sony VAIO VGN-Z21XN Battery
which provided $3 billion, underlining his instrumental role during the current crisis in debt and equity markets.
In 2008, Buffett became the richest man in the world dethroning Bill Gates, worth $62 billion according to Forbes, and $58 billion according to Yahoo.Sony VAIO VGN-Z21ZN/X Battery
Bill Gates had been number one on the Forbes list for 13 consecutive years. In 2009, Bill Gates regained number one of the list according to Forbes magazine, with Buffett second. Their values have dropped to $40 billion and $37 billion respectively, Buffett having (according to Forbes) lost $25 billion in 12 months during 2008/2009.Sony VAIO VGN-Z25 Battery
In October 2008, the media reported that Warren Buffett had agreed to buy General Electric (GE) preferred stock.The operation included extra special incentives: he received an option to buy 3 billion GE at $22.25 in the next five years, and also received a 10% dividend (callable within three years). Sony VAIO VGN-Z25/B Battery
In February 2009, Buffett sold some of the Procter & Gamble Co, and Johnson & Johnson shares from his portfolio.
In addition to suggestions of mistiming, questions have been raised as to the wisdom in keeping some of Berkshire's major holdings, including The Coca-Cola Company (NYSE:KO) which in 1998 peaked at $86.Sony VAIO VGN-Z25TN/B Battery
Buffett discussed the difficulties of knowing when to sell in the company's 2004 annual report:
That may seem easy to do when one looks through an always-clean, rear-view mirror. Unfortunately, however, it’s the windshield through which investors must peer, and that glass is invariably fogged.Sony VAIO VGN-Z26TN/B Battery
In March 2009, Buffett stated in a cable television interview that the economy had "fallen off a cliff... Not only has the economy slowed down a lot, but people have really changed their habits like I haven't seen". Additionally, Buffett fears we may revisit a 1970s level of inflation, which led to a painful stagflation that lasted many years.Sony VAIO VGN-Z27 Battery
In 2009, Warren Buffett invested $2.6 billion as a part of Swiss Re's raising equity capital. Berkshire Hathaway already owns a 3% stake, with rights to own more than 20%. In 2009, Warren Buffett acquired Burlington Northern Santa Fe Corp. for $34 billion in cash and stock. Sony VAIO VGN-Z27/B Battery
Alice Schroeder, author of Snowball, stated that a reason for the purchase was to diversify Berkshire Hathaway from the financial industry. Measured by market capitalization in the Financial Times Global 500 Berkshire Hathaway as of June 2009 was the eighteenth largest corporation on earth.Sony VAIO VGN-Z27TN/X Battery
In 2009, Buffett divested his failed investment in ConocoPhillips, saying to his Berkshire investors,
I bought a large amount of ConocoPhillips stock when oil and gas prices were near their peak. I in no way anticipated the dramatic fall in energy prices that occurred in the last half of the year.Sony VAIO VGN-Z29N Battery
I still believe the odds are good that oil sells far higher in the future than the current $40–$50 price. But so far I have been dead wrong. Even if prices should rise, moreover, the terrible timing of my purchase has cost Berkshire several billion dollars.Sony VAIO VGN-Z29N/X Battery
The merger with the Burlington Northern Santa Fe Railway (BNSF) closed upon BNSF shareholder approval in 1Q2010. This deal is valued at approximately $34 billion and reflects an increase of a previously existing stake of about 22%.
In June 2010, Buffett defended the credit rating agencies for their role in the US financial crisis, claiming that:Sony VAIO VGN-Z31MN/B Battery
Very, very few people could appreciate the bubble. That's the nature of bubbles – they're mass delusions.
On March 18, 2011, Goldman Sachs acquired Federal Reserve approval to buy back Berkshire's preferred stock in Goldman. Buffet has been reluctant to give up the stock which averaged $1.4 million in dividends a day, stating:Sony VAIO VGN-Z31VN/X Battery
I'm going to be the Osama bin Laden of capitalism. I'm on my way to an unknown destination in Asia where I'm going to look for a cave. If the U.S. Armed forces can't find Osama bin Laden in 10 years, let Goldman Sachs try to find me.Sony VAIO VGN-Z31WN/B Battery
Buffett married Susan Buffett (née Thompson) in 1952. They had three children, Susie, Howard and Peter. The couple began living separately in 1977, although they remained married until her death in July 2004. Sony VAIO VGN-Z31ZN/X Battery
Their daughter, Susie, lives in Omaha and does charitable work through the Susan A. Buffett Foundation and is a national board member of Girls, Inc. In 2006, on his seventy-sixth birthday, Warren married his never-married longtime-companion, Astrid Menks, who was then 60 years old. Sony VAIO VGN-Z35 Battery
She had lived with him since his wife's departure to San Francisco in 1977. It was Susan Buffett who arranged for the two to meet before she left Omaha to pursue her singing career. All three were close and Christmas cards to friends were signed "Warren, Susie and Astrid".Sony VAIO VGN-Z35/B Battery
Susan Buffett briefly discussed this relationship in an interview on the Charlie Rose Show shortly before her death, in a rare glimpse into Buffett's personal life.
Warren Buffett disowned his son Peter's adopted daughter, Nicole, in 2006 after she participated in the Jamie Johnson documentary, The One Percent.Sony VAIO VGN-Z35TN/B Battery
Although his first wife had referred to Nicole as one of her "adored grandchildren",Buffett wrote her a letter stating, "I have not emotionally or legally adopted you as a grandchild, nor have the rest of my family adopted you as a niece or a cousin." He signed the letter "Warren."Sony VAIO VGN-Z36GD Battery
His 2006 annual salary was about $100,000, which is small compared to senior executive remuneration in comparable companies.In 2007 and 2008, he earned a total compensation of $175,000, which included a base salary of just $100,000.Sony VAIO VGN-Z36GD/B Battery
He lives in the same house in the central Dundee neighborhood of Omaha that he bought in 1958 for $31,500, today valued at around $700,000 (although he also owns a $4 million house in Laguna Beach, California). In 1989 after having spent nearly 6.7 million dollars of Berkshire's funds on a private jet, Buffett sheepishly named it "The Indefensible". Sony VAIO VGN-Z36GD/J Battery
This act was a break from his past condemnation of extravagant purchases by other CEOs and his history of using more public transportation.
He remains an avid player of bridge, which he learned from Sharon Osberg, and plays with her and Bill Gates.Sony VAIO VGN-Z36TD/B Battery
He spends twelve hours a week playing the game. In 2006, he sponsored a bridge match for the Buffett Cup. Modeled on the Ryder Cup in golf, held immediately before it, and in the same city, a team of twelve bridge players from the United States took on twelve Europeans in the event. Sony VAIO VGN-Z36TD/J Battery
He is a dedicated, lifelong follower of Nebraska football, and attends as many games as his schedule permits. He supported the hire of Bo Pelini following the 2007 season stating, "It was getting kind of desperate around here". He watched the 2009 game against Oklahoma from the Nebraska sideline after being named an honorary assistant coach.Sony VAIO VGN-Z37D Battery
Warren Buffett worked with Christopher Webber on an animated series with chief Andy Heyward, of DiC Entertainment, and then A Squared Entertainment. The series features Buffett and Munger, and teaches children healthy financial habits for life.Buffett was raised Presbyterian but has since described himself asagnostic.Sony VAIO VGN-Z37D/B Battery
In December 2006 it was reported that Buffett does not carry a cell phone, does not have a computer at his desk, and drives his own automobile, aCadillac DTS. Buffett wears tailor-made suits from the Chinese label Trands; earlier he wore Ermenegildo Zegna.Sony VAIO VGN-Z37GD Battery
Buffett's DNA report revealed that his paternal ancestors hail from northern Scandinavia, while his maternal ancestors most likely have roots in Iberia orEstonia.Sony VAIO VGN-Z37GD/X Battery
In 1999, Buffett was named the top money manager of the Twentieth Century in a survey by the Carson Group, ahead of Peter Lynch and John Templeton. In 2007, he was listed among Time's 100 Most Influential People in the world.Sony VAIO VGN-Z39D Battery
In 2011, President Barack Obama awarded him the Presidential Medal of Freedom. Most recently, Buffett, along with Bill Gates, was named the most influential global thinker in Foreign Policy's 2010 report. Sony VAIO VGN-Z39D/X Battery
In addition to other political contributions over the years, Buffett has formally endorsed and made campaign contributions toBarack Obama's presidential campaign. On July 2, 2008, Buffett attended a $28,500 per plate fundraiser for Obama's campaign in Chicago hosted by Obama's National Finance Chair, Penny Pritzker and her husband, as well as Obama advisor Valerie Jarrett.Sony VAIO VGN-Z41MD/B Battery
Buffett backed Obama for president, and intimated that John McCain's views on social justice were so far from his own that McCain would need a "lobotomy" for Buffett to change his endorsement.During the second 2008 U.S. presidential debate, candidates John McCain and Barack Obama,Sony VAIO VGN-Z41WD/B Battery
after being asked first by presidential debate mediator Tom Brokaw, both mentioned Buffett as a possible future Secretary of the Treasury.Later, in the third and final presidential debate, Obama mentioned Buffett as a potential economic advisor.Sony VAIO VGN-Z45GD/B Battery
Buffett was also finance advisor to California Republican Governor Arnold Schwarzenegger during his 2003 election campaign.
Warren Buffett's writings include his annual reports and various articles. Buffett is recognized by communicators as a great story-teller, as evidenced by his annual letters to shareholders. Sony VAIO VGN-Z45TD/B Battery
He warned about the pernicious effects of inflation:
The arithmetic makes it plain that inflation is a far more devastating tax than anything that has been enacted by our legislatures. The inflation tax has a fantastic ability to simply consume capital. Sony VAIO VGN-Z46GD/B Battery
It makes no difference to a widow with her savings in a 5 percent passbook account whether she pays 100 percent income tax on her interest income during a period of zero inflation, or pays no income taxes during years of 5 percent inflation.Sony VAIO VGN-Z46GD/U Battery
In his article The Superinvestors of Graham-and-Doddsville, Buffett rebutted the academic Efficient-market hypothesis, that beating the S&P 500 was "pure chance", by highlighting the results achieved by a number of students of the Graham and Dodd value investing school of thought. In addition to himself, Sony VAIO VGN-Z46MD/B Battery
Buffett named Walter J. Schloss, Tom Knapp, Ed Anderson (Tweedy, Brown Inc.), Bill Ruane (Sequoia Fund, Inc.), Charles Munger (Buffett's own business partner at Berkshire), Rick Guerin (Pacific Partners, Ltd.), and Stan Perlmeter (Perlmeter Investments).In his November 1999 Fortune article, he warned of investors' unrealistic expectations:Sony VAIO VGN-Z46SD/B Battery
Let me summarize what I've been saying about the stock market: I think it's very hard to come up with a persuasive case that equities will over the next 17 years perform anything like—anything like—they've performed in the past 17. If I had to pick the most probable return, from appreciation and dividends combined,Sony VAIO VGN-Z46TD/B Battery
that investors in aggregate—repeat, aggregate—would earn in a world of constant interest rates, 2% inflation, and those ever hurtful frictional costs, it would be 6%!
In 2008 he was ranked by Forbes as the richest person in the world with an estimated net worth of approximately US$62 billion.Sony VAIO VGN-Z46TD/R Battery
In 2009, after donating billions of dollars to charity, Buffett was ranked as the second richest man in the United States with a net worth of US$37 billion with only Bill Gates ranked higher than Buffett. His net worth is up to $47 billion in the past 12 months.Sony VAIO VGN-Z47GD/X Battery
The following quotation from 1988 highlights Warren Buffett's thoughts on his wealth and why he long planned to re-allocate it:
I don't have a problem with guilt about money. The way I see it is that my money represents an enormous number of claim checks on society. Sony VAIO VGN-Z48GD/X Battery
It's like I have these little pieces of paper that I can turn into consumption. If I wanted to, I could hire 10,000 people to do nothing but paint my picture every day for the rest of my life. And the GDP would go up. But the utility of the product would be zilch, and I would be keeping those 10,000 people from doing AIDS research, or teaching, or nursing.Sony VAIO VGN-Z48TD/X Battery
I don't do that though. I don't use very many of those claim checks. There's nothing material I want very much. And I'm going to give virtually all of those claim checks to charity when my wife and I die. (Lowe 1997:165–166)
From a NY Times article: "I don't believe in dynastic wealth", Warren Buffett said, calling those who grow up in wealthy circumstances "members of the lucky sperm club".Sony VAIO VGN-Z51WG/B Battery
Buffett has written several times of his belief that, in a market economy, the rich earn outsized rewards for their talents:
A market economy creates some lopsided payoffs to participants. The right endowment of vocal chords, anatomical structure, physical strength, or mental powers can produce enormous piles of claim checks Sony VAIO VGN-Z51XG/B Battery
(stocks, bonds, and other forms of capital) on future national output. Proper selection of ancestors similarly can result in lifetime supplies of such tickets upon birth. If zero real investment returns diverted a bit greater portion of the national output from such stockholders to equally worthy and hardworking citizens lacking jackpot-producing talents, Sony VAIO VGN-Z530N/B Battery
it would seem unlikely to pose such an insult to an equitable world as to risk Divine Intervention.
His children will not inherit a significant proportion of his wealth. This is consistent with statements he has made in the past indicating his opposition to the transfer of great fortunes from one generation to the next.Sony VAIO VGN-Z540EBB Battery
Buffett once commented, "I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing".
In June 2006, he announced a plan to give away his fortune to charity, with 83% of it going to the Bill & Melinda Gates Foundation.Sony VAIO VGN-Z540NLB Battery
He pledged about the equivalent of 10 million Berkshire Hathaway Class B shares to the Bill & Melinda Gates Foundation (worth approximately US$30.7 billion as of June 23, 2006),making it the largest charitable donation in history, and Buffett one of the leaders of philanthrocapitalism.Sony VAIO VGN-Z540NMB Battery
The foundation will receive 5% of the total donation on an annualised basis each July, beginning in 2006. (Significantly, however, the pledge is conditional upon the foundation's giving away each year, beginning in 2009, an amount that is at least equal to the value of the entire previous year's gift from Buffett, in addition to 5% of the foundation's net assets.)Sony VAIO VGN-Z550N/B Battery
Buffett also will join the board of directors of the Gates Foundation, although he does not plan to be actively involved in the foundation's investments.
This is a significant shift from previous statements Buffett has made, having stated that most of his fortune would pass to his Buffett Foundation.Sony VAIO VGN-Z55F Battery
The bulk of the estate of his wife, valued at $2.6 billion, went to that foundation when she died in 2004. He also pledged $50-million to the Nuclear Threat Initiative, in Washington, where he has served as an adviser since 2002.
In 2006, he auctioned his 2001 Lincoln Town Car on eBay to raise money for Girls, Inc.Sony VAIO VGN-Z55TG/B Battery
In 2007, he auctioned a luncheon with himself that raised a final bid of $650,100 for a charity. On June 27, 2008, Zhao Danyang, a general manager at Pure Heart China Growth Investment Fund, won the 2008 5-day online "Power Lunch with Warren Buffett" charity auction with a bid of $2,110,100. Sony VAIO VGN-Z56GG/B Battery
Auction proceeds benefit the San Francisco Glide Foundation.The following year, executives from Toronto-based Salida Capital paid US$1.68 million to dine with Buffett.
In a letter to Fortune Magazine's website in 2010 Buffett remarked:Sony VAIO VGN-Z56GG/E Battery
My luck was accentuated by my living in a market system that sometimes produces distorted results, though overall it serves our country well... I’ve worked in an economy that rewards someone who saves the lives of others on a battlefield with a medal, Sony VAIO VGN-Z56GGX Battery
rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into the billions. In short, fate’s distribution of long straws is wildly capricious. (Buffett Says ‘Capricious’ Economy Requires Charity (Update1) by Hugh Son, Bloomberg, June 16, 2010 16:17 EDT).Sony VAIO VGN-Z56TG/B Battery
I’ll tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. It’s addictive. And there’s fantastic brand loyalty.
This statement was made as part of a joint proposal with Bill Gates to encourage other wealthy individuals to pool some of their fortunes for charitable purposes.Sony VAIO VGN-Z56TG/E Battery
Bill Gates's wife Melinda urged people to learn a lesson from the philanthropic efforts of the family that sold its home and gave away half of its value, as detailed in The Power of Half. On December 9, 2010, Buffett, Bill Gates, and Mark Zuckerberg (Facebook's CEO),Sony VAIO VGN-Z56TG/R Battery
signed a promise they called the "Gates-Buffett Giving Pledge", in which they promised to donate to charity at least half of their wealth over time, and invited others among the wealthy to donate 50% or more of their wealth to charity.
Buffett's speeches are known for mixing business discussions with humor. Sony VAIO VGN-Z570N/B Battery
Each year, Buffett presides over Berkshire Hathaway's annual shareholder meeting in theQwest Center in Omaha, Nebraska, an event drawing over 20,000 visitors from both United States and abroad, giving it the nickname "Woodstock of Capitalism". Berkshire's annual reports and letters to shareholders, prepared by Buffett, frequently receive coverage by the financial media.Sony VAIO VGN-Z57G Battery
Buffett's writings are known for containing quotations from sources as ranging between the Bible and Mae West,as well as advice in a Midwestern folk style, and numerous jokes.
During the RJR Nabisco, Inc. hostile takeover fight in 1987, Buffett was quoted as telling John Gutfreund:Sony VAIO VGN-Z57GG/X Battery
I’ll tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. It’s addictive. And there’s fantastic brand loyalty.
Speaking at Berkshire Hathaway Inc.'s 1994 annual meeting, Buffett said investments in tobacco are:Sony VAIO VGN-Z57GGX Battery
fraught with questions that relate to societal attitudes and those of the present administration. I would not like to have a significant percentage of my net worth invested in tobacco businesses. The economy of the business may be fine, but that doesn't mean it has a bright future.Sony VAIO VGN-Z57TG/X Battery
In 2007, Buffett's PacifiCorp, a subsidiary of his MidAmerican Energy Company, canceled six proposed coal-fired power plants. These included Utah's Intermountain Power Project Unit 3, Jim Bridger Unit 5, and four proposed plants previously included in PacifiCorp's Integrated Resource Plan.Sony VAIO VGN-Z58GG/X Battery
The cancellations came in the wake of pressure from regulators and citizen groups, including a petition drive organized by Salt Lake City commercial real estate broker Alexander Lofft and directed at Buffett personally. The 1,600 petitioners, who described themselves in a letter to Buffett as "a collection of citizens,Sony VAIO VGN-Z58GGX Battery
business owners and managers, service professionals, public servants, and organization representatives ... your friends and new customers here in Utah," explained that, in their view, any further expansion of coal generation in Utah would "compromise our health, obscure our viewsheds, shrink and contaminate our watersheds,Sony VAIO VGN-Z590NJB Battery
and thin out our most beloved snow pack," concluding that "our attractiveness as a place to live and work is also threatened, and so is our economic competitiveness as a major metro area and a state, compromising our recent gains in income and property values".Sony VAIO VGN-Z590UAB Battery
American Indian tribes and salmon fishermen sought to win support from Warren Buffett for a proposal to remove four hydroelectric dams from the Klamath River. He had David Sokol respond that the FERC would decide the question.Sony VAIO VGN-Z591U/B Battery
Buffett views the United States' expanding trade deficit as a trend that will devalue the US dollar and US assets. He believes that the US dollar will lose value in the long run, as a result of putting a larger portion of ownership of US assets in the hands of foreigners.Sony VAIO VGN-Z59G Battery
In his letter to shareholders in March 2005, Warren Buffett predicted that in another ten years’ time the net ownership of the U.S. by outsiders would amount to $11 trillion.
Americans ... would chafe at the idea of perpetually paying tribute to their creditors and owners abroad.Sony VAIO VGN-Z620D Battery
A country that is now aspiring to an ‘ownership society’ will not find happiness in – and I’ll use hyperbole here for emphasis – a 'sharecropping society’.
Author Ann Pettifor has adopted the image in her writings and has stated: "He is right. Sony VAIO VGN-Z620N/B Battery
And so the thing we must fear most now, is not just the collapse of banks and investment funds, or of the international financial architecture, but of a 'sharecropper society, angry at its downfall".
Dollar and gold
The trade deficit induced Buffett to enter the foreign currency market for the first time in 2002. Sony VAIO VGN-Z650N/B Battery
However, he substantially reduced his stake in 2005 as changing interest rates increased the costs of holding currency contracts. Buffett continues to be bearish on the dollar, and says he is looking to acquire companies which derive a substantial portion of their revenues from outside the United States. Sony VAIO VGN-Z670N/B Battery
Buffett emphasized the non-productive aspect of a gold standard for the USD in 1998 at Harvard:
It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.Sony VAIO VGN-Z690CTO Battery
In 1977 Buffett was also quoted as saying about stocks, gold, farmland, and inflation:
Stocks are probably still the best of all the poor alternatives in an era of inflation – at least they are if you buy in at appropriate prices.Sony VAIO VGN-Z690NAX Battery
Buffett stated that he only paid 19% of his income for 2006 ($48.1 million) in total federal taxes (due to their being from dividends & capital gains), while his employees paid 33% of theirs, despite making much less money. “How can this be fair?” Buffet asked, regarding how little he pays in taxes compared to his employees. Sony VAIO VGN-Z690PAB Battery
“How can this be right?” He also added:
“There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”
Buffett favors the inheritance tax, saying that repealing it would be like "choosing the 2020 Olympic team by picking the eldest sons of the gold-medal winners in the 2000 Olympics".Sony VAIO VGN-Z690PCB Battery
In 2007, Buffett testified before the Senate and urged them to preserve the estate tax so as to avoid a plutocracy. Some critics have argued that Buffett (through Berkshire Hathaway) has a personal interest in the continuation of the estate tax, Sony VAIO VGN-Z690PDB Battery
since Berkshire Hathaway has benefited from the estate tax in past business dealings and had developed and marketed insurance policies to protect policy holders against future estate tax payments. Buffett believes government should not be in the business of gambling, or legalizing casinos, calling it a tax on ignorance.Sony VAIO VGN-Z690PEB Battery
Expensing of stock options
He has been a strong proponent of stock option expensing on the Income Statement. At the 2004 annual meeting, he lambasted a bill before the United States Congress that would consider only some company-issued stock options compensation as an expense,Sony VAIO VGN-Z690PFB Battery
likening the bill to one that was almost passed by the Indiana House of Representatives to change the value of Pi from 3.14159 to 3.2 through legislative fiat.
When a company gives something of value to its employees in return for their services, it is clearly a compensation expense. And if expenses don't belong in the earnings statement, where in the world do they belong?Sony VAIO VGN-Z690YAD Battery
Investing in China
Buffett invested in PetroChina Company Limited and in a rare move, posted a commentary on Berkshire Hathaway's website stating why he would not divest from the company despite calls from some activists to do so, due to its connection with the Sudanese civil war that caused Harvard to divest from the company in 2005.Sony VAIO VGN-Z691Y/B Battery
He did, however, sell this stake soon afterwards, sparing him the billions of dollars he would have lost had he held on to the company in the midst of the steep drop in oil prices beginning in the summer of 2008.
In October 2008, Buffett invested in new energy automobile business by paying $230 million for 10% of BYD Company (SEHK: 1211), which runs a subsidiary of electric automobile manufacturer BYD Auto.Sony VAIO VGN-Z691Y/X Battery
In less than one year, the investment has reaped him over 500% return of profit.
Books about Buffett
Numerous books have been written about Warren Buffett and his investment strategies. In October 2008, USA Today reported that there were at least 47 books in print with Buffett's name in the title.Sony VAIO VGN-Z698Y/X Battery
The article quoted the CEO of Borders Books, George Jones, as saying that the only other living persons named in as many book titles were U.S. presidents, major world political figures, and the Dalai Lama.Buffett said that his own personal favorite is a collection of his essays calledThe Essays of Warren Buffett,Sony VAIO VGN-Z699JAB Battery
which he described as "a coherent rearrangement of ideas from my annual report letters" as edited by Larry Cunningham.
Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) is an American multinational conglomerate holding company headquartered in Omaha, Nebraska, United States, that oversees and manages a number of subsidiary companies. Sony VAIO VGN-Z70B Battery
The company averaged an annual growth in book value of 20.3% to its shareholders for the last 44 years, while employing large amounts of capital, and minimal debt.Berkshire Hathaway stock produced a total return of 76% from 2000–2010 versus a negative 11.3% return for the S&P 500.Sony VAIO VGN-Z71JB Battery
Warren Buffett is the company's chairman and CEO. Buffett has used the "float" provided by Berkshire Hathaway's insurance operations (paid premiums which are not held in reserves for reported claims and may be invested) to finance his investments.Sony VAIO VGN-Z73FB Battery
In the early part of his career at Berkshire, he focused on long-term investments in publicly quoted stocks, but more recently he has turned to buying whole companies. Berkshire now owns a diverse range of businesses including confectionery, retail, railroad, home furnishings, encyclopedias, manufacturers of vacuum cleaners, jewelry sales;Sony VAIO VGN-Z790DKX Battery
newspaper publishing; manufacture and distribution of uniforms; as well as several regional electric and gas utilities.
According to the Forbes Global 2000 List Berkshire Hathaway is the eighth largest public company in the world.Sony VAIO VGN-Z790DMR Battery
Berkshire Hathaway traces its roots to a textile manufacturing company established by Oliver Chace in 1839 as the Valley Falls Company in Valley Falls, Rhode Island. Chace had previously worked for Samuel Slater, the founder of the first successful textile mill in America.Sony VAIO VGN-Z790DND Battery
Chace founded his first textile mill in 1806. In 1929 the Valley Falls Company merged with the Berkshire Cotton Manufacturing Company established in 1889, in Adams, Massachusetts. The combined company was known as Berkshire Fine Spinning Associates.Sony VAIO VGN-Z820DB Battery
In 1955 Berkshire Fine Spinning Associates merged with the Hathaway Manufacturing Company which was founded in 1888 in New Bedford, Massachusetts by Horatio Hathaway. Hathaway was successful in its first decades, but it suffered during a general decline in the textile industry after World War I.Sony VAIO VGN-Z820G/B Battery
At this time, Hathaway was run by Seabury Stanton, whose investment efforts were rewarded with renewed profitability after the Depression. After the merger Berkshire Hathaway had 15 plants employing over 12,000 workers with over $120 million in revenue and was headquartered in New Bedford, Massachusetts.Sony VAIO VGN-Z890GLX Battery
However, seven of those locations were closed by the end of the decade, accompanied by large layoffs.
In 1962, Warren Buffett began buying stock in Berkshire Hathaway after noticing a pattern in the price direction of its stock whenever the company closed a mill. Sony VAIO VGN-Z890GMR Battery
Eventually, Buffett acknowledged that the textile business was waning and the company's financial situation was not going to improve. In 1964, Stanton made a verbal tender offer of $111?2 per share for the company to buy back Buffett's shares. Buffett agreed to the deal. Sony VAIO VGN-Z898H/X Battery
A few weeks later, Warren Buffett received the tender offer in writing, but the tender offer was for only $113?8. Buffett later admitted that this lower, undercutting offer made him angry. Instead of selling at the slightly lower price, Buffett decided to buy more of the stock to take control of the company and fire Stanton (which he did). Sony VAIO VGN-Z90FS Battery
However, this put Buffett in a situation where he was now majority owner of a textile business that was failing.
In 2010, Buffett claimed that purchasing Berkshire Hathaway was the biggest investment mistake he had ever made, and claimed that it had denied him compounded investment returns of about $200 billion over the previous 45 years.Sony VAIO VGN-Z90NS Battery
Buffett claimed that had he invested that money directly in insurance businesses instead of buying out Berkshire Hathaway (due to what he perceived as a slight by an individual), those investments would have paid off several hundredfold.Sony VAIO VGN-Z90PS Battery
Buffett initially maintained Berkshire's core business of textiles, but by 1967, he was expanding into the insurance industry and other investments. Berkshire first ventured into the insurance business with the purchase of National Indemnity Company. Sony VAIO VGN-Z90S Battery
In the late 1970s, Berkshire acquired an equity stake in the Government Employees Insurance Company (GEICO), which forms the core of its insurance operations today (and is a major source of capital for Berkshire Hathaway's other investments). In 1985, the last textile operations (Hathaway's historic core) were shut down.Sony VAIO VGN-Z90US Battery
Berkshire's class A shares sold for $108,020.00 as of September 28, 2011, making them the highest-priced shares on the New York Stock Exchange, in part because they have never had a stock split and never paid a dividend, Sony VAIO VGN-Z91DS Battery
retaining corporate earnings on its balance sheet in a manner that is impermissible for private investors andmutual funds. Shares closed over $100,000 for the first time on October 23, 2006 and closed at an all-time high of $150,000 on December 13, 2007.Sony VAIO VGN-Z91JS Battery
Despite its size, Berkshire has not been included in broad stock market indices such as the S&P 500 due to the lack of liquidity in its shares; however, following a 50-to-1 split of Berkshire's class B shares in January 2010, Burlington Northern was replaced by Berkshire in the S&P 500 on February 16, 2010. Sony VAIO VGN-Z91PS Battery
Berkshire's CEO is Warren Buffett. His annual chairman's letters are widely read and quoted. Barron's Magazine named Berkshire the most respected company in the world in 2007 based on a survey of American money managers.
In 2008, Berkshire invested in preferred shares of Goldman Sachs as part of a recapitalization of the investment bank.Sony VAIO VGN-Z91YS Battery
Buffett defended Goldman CEO Lloyd Blankfein's $132 million pay package when the company had taken and not yet paid back $10 billion in Troubled Asset Relief Program (TARP) money from the United States Department of Treasury.
As of July 1, 2010, Buffett owned 32.4% aggregate voting power of Berkshire's shares outstanding and 23.3% of the economic value of those shares.Sony VAIO VGN-Z92DS Battery
Berkshire's vice-chairman, Charlie Munger, also holds a stake big enough to make him a billionaire, and early investments in Berkshire by David Gottesman and Franklin Otis Boothresulted in their becoming billionaires as well. Bill Gates' Cascade Investments LLC is the second largest shareholder of Berkshire and owns more than 5% of class B shares.Sony VAIO VGN-Z92JS Battery
Berkshire Hathaway is notable in that it has never split its shares, which not only contributed to their high per-share price but also significantly reduced theliquidity of the stock. This refusal to split the stock reflects the management's desire to attract long-term investors as opposed to short-term speculators. Sony VAIO VGN-Z92PS Battery
However, Berkshire Hathaway has created a Class B stock, with a per-share value originally kept (by specific management rules) close to 1?30 of that of the original shares (now Class A) and 1?200 of the per-share voting rights, and after the January 2010 split, at 1?1,500 the price and 1?10,000 the voting rights of the Class-A shares.Sony VAIO VGN-Z92YS Battery
Holders of class A stock are allowed to convert their stock to Class B, though not vice versa. Buffett was reluctant to create the class B shares, but did so to thwart the creation of unit trusts that would have marketed themselves as Berkshire look-alikes. As Buffett said in his 1995 shareholder letter: "The unit trusts that have recently surfaced fly in the face of these goals.Sony VAIO VGN-Z93FS Battery
They would be sold by brokers working for big commissions, would impose other burdensome costs on their shareholders, and would be marketed en masse to unsophisticated buyers, apt to be seduced by our past record and beguiled by the publicity Berkshire and I have received in recent years.Sony VAIO VGN-Z93GS Battery
The sure outcome: a multitude of investors destined to be disappointed."
Berkshire's annual shareholders' meetings, taking place in the Qwest Center in Omaha, Nebraska, are routinely visited by 20,000 people. The 2007 meeting had an attendance of approximately 27,000. Sony VAIO VGN-Z93HS Battery
The meetings, nicknamed "Woodstock for Capitalists", are considered Omaha's largest annual event along with the baseball College World Series. Known for their humor and light-heartedness, the meetings typically start with a movie made for Berkshire shareholders.Sony VAIO VGN-Z93VS Battery
The 2004 movie featured Arnold Schwarzenegger in the role of "The Warrenator" who travels through time to stop Buffett and Munger's attempt to save the world from a "mega" corporation formed by Microsoft-Starbucks-Wal-Mart. Schwarzenegger is later shown arguing in a gym with Buffett regarding Proposition 13.Sony A1258274A Battery
The 2006 movie depicted actresses Jamie Lee Curtis and Nicollette Sheridan lusting after Munger.The meeting, scheduled to last six hours, is an opportunity for investors to ask Buffett questions.
The salary for the CEO is US$100,000 per year with no stock options, which is among the lowest salaries for CEOs of large companies in the United States.Sony VGP-BPL10 Battery
The current members of the board of directors of Berkshire Hathaway are Warren Buffett, Charlie Munger, Walter Scott, Jr., Thomas S. Murphy, Howard Graham Buffett,Ronald Olson, Donald Keough, Charlotte Guyman, David Gottesman, Bill Gates, Stephen Burke and Susan Decker.Sony VGP-BPS10 Battery
In May 2010, Buffett, months away from his 80th birthday, said he would be succeeded at Berkshire Hathaway by a team consisting of a CEO and three or four investment managers; each of the latter would be responsible for a "significant portion of Berkshire's investment portfolio."Sony VGP-BPS10/S Battery
Five months later, Berkshire announced thatTodd Combs, manager of the hedge fund Castle Point Capital, would join them as an investment manager.
On September 12, 2011, Berkshire Hathaway announced that 50-year-old Ted Weschler, founder of Peninsula Capital Advisors, will join Berkshire in early 2012 as a second investment manager.Sony VGP-BPS10A/B Battery
Insurance and reinsurance business activities are conducted through approximately 70 domestic and foreign-based insurance companies. Berkshire’s insurance businesses provide insurance and reinsurance of property and casualty risks primarily in the United States.Sony VGP-BPS10B Battery
In addition, as a result of the General Re acquisition in December 1998, Berkshire’s insurance businesses also included life, accident and health reinsurers, as well as internationally based property and casualty reinsurers. Berkshire’s insurance companies maintain capital strength at exceptionally high levels. Sony VGP-BPS10A Battery
This strength differentiates Berkshire’s insurance companies from their competitors. Collectively, the aggregate statutory surplus of Berkshire’s U.S. based insurers was approximately $48 billion as of December 31, 2004. All of Berkshire’s major insurance subsidiaries are rated AAA by Standard & Poor’s Corporation,Sony VGP-BPS11 Battery
the highest Financial Strength Rating assigned by Standard & Poor’s, and are rated A++ (superior) by A. M. Best with respect to their financial condition and operating performance.
GEICO – Berkshire acquired GEICO in January 1996. Sony VGP-BPL11 Battery
GEICO is headquartered in Chevy Chase, Maryland, and its principal insurance subsidiaries include: Government Employees Insurance Company, GEICO General Insurance Company, GEICO Indemnity Company, and GEICO Casualty Company. Sony VGP-BPL12 Battery
Over the past five years, these companies have offered primarily private passenger automobile insurance to individuals in all 50 states and the District of Columbia. The subsidiaries market their policies primarily through direct response methods, in which applications for insurance are submitted directly to the companies by telephone, through the mail, or via the Internet.Sony VGP-BPS12 Battery
General Re – Berkshire acquired General Re in December 1998. General Re held a 91% ownership interest in Cologne Re as of December 31, 2004. General Re subsidiaries currently conduct global reinsurance business in approximately 72 cities and provide reinsurance coverage worldwide.Sony VGP-BPL13 Battery
General Re operates the following reinsurance businesses: North American property/casualty, international property/casualty, which principally consists of Cologne Re and the Faraday operations, and life/health reinsurance. General Re’s reinsurance operations are primarily based in Stamford, Connecticut and Cologne, Germany. Sony VGP-BPS13 Battery
General Re is one of the largest reinsurers in the world based on net premiums written and capital.
NRG (Nederlandse Reassurantie Groep) – Berkshire acquired NRG, a Dutch life reinsurance company, from ING Group in December 2007.Sony VGP-BPS13/B Battery
Berkshire Hathaway Assurance – Berkshire created a government bond insurance company to insure municipal and state bonds. These type bonds are issued by local governments to finance public works projects such as schools, hospitals, roads, and sewer systems. Few companies are capable of competing in this area.Sony VGP-BPS13/S Battery
Utilities and energy group
Berkshire currently holds 83.7% (80.5% on a fully diluted basis) of the MidAmerican Energy Holdings Company. At the time of purchase, Berkshire's voting interest was limited to 10% of the company's shares, but this restriction ended when the Public Utility Holding Company Act of 1935 was repealed in 2005. A major subsidiary of MidAmerican is CE Electric UK.Sony VGP-BPS13/S Battery
Berkshire’s apparel businesses include manufacturers and distributors of a variety of clothing and footwear. Businesses engaged in the manufacture and distribution of clothing include Union Underwear Corp. – Fruit of the Loom, Garan, Fechheimer Brothers and Russell Corporation.Sony VGP-BPS13A/B Battery
Berkshire’s footwear businesses include H.H. Brown Shoe Group, Acme Boots and Justin Brands. Berkshire acquired Fruit of the Loom on April 29, 2002 for $835 million in cash. Fruit of the Loom, headquartered inBowling Green, Kentucky, is a vertically integrated manufacturer of basic apparel.Sony VGP-BPS13A/S Battery
Berkshire acquired Russell Corporation on August 2, 2006 for $600 million or $18.00 per share.
In August 2000, Berkshire entered the building products business with the acquisition of Acme Building Brands.Sony VGP-BPS13AS Battery
Acme, headquartered in Fort Worth, Texas, manufactures and distributes clay bricks (Acme Brick), concrete block (Featherlite) and cut limestone (Texas Quarries). It expanded its building products business in December 2000, when it acquired Benjamin Moore & Co. of Montvale, New Jersey.Sony VGP-BPS13B/B Battery
Moore formulates, manufactures and sells primarily architectural coatings that are available principally in the United States and Canada.
In 2001, Berkshire acquired three additional building products companies. Sony VGP-BPS13B/Q Battery
In February, it purchased Johns Manville which was established in 1885 and manufactures fiber glass wool insulation products for homes and commercial buildings, as well as pipe, duct and equipment insulation products. In July, Berkshire acquired a 90% equity interest in MiTek Inc., Sony VGP-BPS13B/S Battery
which makes engineered connector products, engineering software and services, and manufacturing machinery for the truss fabrication segment of the building components industry and is headquartered in Chesterfield, Missouri. Finally in 2001, Berkshire acquired 87 percent of Dalton, Georgia-based Shaw Industries, Inc.Sony VGP-BPS13Q Battery
Shaw is the world’s largest carpet manufacturer based on both revenue and volume of production and designs and manufactures over 3,000 styles of tufted and woven carpet and laminate flooring for residential and commercial use under approximately 30 brand and trade names and under certain private labels. Sony VGP-BPS13S Battery
In 2002, Berkshire Acquired the remaining 12.7 percent of Shaw.
On August 7, 2003, Berkshire acquired Clayton Homes, Inc. Clayton, headquartered near Knoxville, Tennessee, is a vertically integrated manufactured housing company. At year-end 2004, Clayton operated 32 manufacturing plants in 12 states.Sony VGP-BPL7 Battery
Clayton’s homes are marketed in 48 states through a network of 1,540 retailers, 391 of which are company-owned sales centers. On May 1, 2008, Mitek acquired Hohmann & Barnard a fabricator of anchors and reinforcement systems for masonry and on October 3 of that year, Mitek acquired Blok-Lok, Ltd. of Toronto, Canada.Sony VGP-BPS7 Battery
On April 23, 2010, Mitek acquired the assets of Dur-O-Wal from Dayton Superior Corporation.
In 1996, Berkshire acquired FlightSafety International Inc. FSI’s corporate headquarters is located at LaGuardia Airport in Flushing, New York.Sony VGP-BPL8 Battery
FSI engages primarily in the business of providing high technology training to operators of aircraft and ships. FlightSafety is the world's leading provider of professional aviation training services. Berkshire acquired NetJets Inc. in 1998. NetJets is the world’s leading provider of fractional ownership programs for general aviation aircraft.Sony VGP-BPL8A Battery
In 1986, NetJets created the fractional ownership of aircraft concept and introduced its NetJets program in the United States with one aircraft type. In 2004, the NetJets program operated 15 aircraft types.
The home furnishings businesses are the Nebraska Furniture Mart, R.C. Willey Home Furnishings,Sony VGP-BPL8B Battery
Star Furniture Company, and Jordan’s Furniture, Inc. CORT Business Services Corporation was acquired in 2000 by an 80.1% owned subsidiary of Berkshire and is the leading national provider of rental furniture, accessories and related services in the “rent-to-rent” segment of the furniture rental industry.Sony VGP-BPS8 Battery
In May 2000, Berkshire purchase Ben Bridge Jewelers. A chain of jewelery stores established in 1912 with locations primarily in the western United States. This joined Berkshire's other jeweler acquisition, Helzberg Diamonds. Helzberg is a chain of jewelery stores based in Kansas City that began in 1915 and became part of Berkshire in 1995.Sony VGP-BPS8A Battery
In 2002, Berkshire acquired The Pampered Chef, Ltd., the largest direct seller of kitchen tools in the United States. Products are researched, designed and tested by The Pampered Chef, and manufactured by third party suppliers. From its Addison, Illinois headquarters,Sony VGP-BPS8B Battery
The Pampered Chef utilizes a network of more than 65,000 independent sales representatives to sell its products through home-based party demonstrations, principally in the United States.
See's Candies produces boxed chocolates and other confectionery products in two large kitchens in California. Sony VGP-BPL9 Battery
See’s revenues are highly seasonal with approximately 50% of total annual revenues being earned in the months of November and December. Dairy Queen services a system of approximately 6,000 stores operating under the names Dairy Queen, Orange Julius and Karmelkorn that offer various dairy desserts, beverages, prepared foods, blended fruit drinks, popcorn and other snack foods.Sony VGP-BPS9 Battery
In 1977, Berkshire Hathaway purchased the Buffalo News and resumed publication of a Sunday edition of the paper that ceased in 1914. After the morning newspaperBuffalo Courier-Express ceased operation in 1982, the paper began to print morning and evening editions. It remains Berkshire's only newspaper holding.Sony VGP-BPS9/B Battery
On December 25, 2007, Berkshire Hathaway acquired Marmon Holdings Inc. Previously it was a privately held conglomerate owned by the Pritzker family for over fifty years, which owned and operated an assortment of manufacturing companies that produce railroad tank cars,Sony VGP-BPS9/S Battery
shopping carts, plumbing pipes, metal fasteners, wiring and water treatment products used in residential construction.
Andin International (designer and manufacturer of fine jewelry), founded by the Buddhist teacher Geshe Michael Roach, is a division of The Richline Group, Inc., a wholly owned subsidiary of Berkshire Hathaway formed in 2007.Sony VGP-BPS9A Battery
Berkshire acquired McLane Company, Inc. in May 2003 from Wal-Mart Stores, Inc., which brought on other subsidiaries such as Professional Datasolutions, Inc. andSalado Sales, among others. McLane provides wholesale distribution and logistics services in all 50 states and internationally in Brazil to customers that include discount retailers, Sony VGP-BPS9A/B Battery
convenience stores, quick service restaurants, drug stores and movie theatre complexes. Scott Fetzer Companies – The Scott Fetzer Companies are a diversified group of 21 businesses that manufacture and distribute a wide variety of products for residential, industrial and institutional use.Sony VGP-BPS9A/S Battery
The three most significant of these businesses are Kirby home cleaning systems, Wayne Water Systems and Campbell Hausfeld products. Scott Fetzer also manufactures Ginsu Knives.
In 2002, Berkshire acquired Albecca Inc. Albecca is headquartered in Norcross, Georgia, and primarily does business under the Larson-Juhl name. Sony VGP-BPS9B Battery
Albecca designs, manufactures and distributes custom framing products, including wood and metal molding, matboard, foamboard, glass, equipment and other framing supplies. Berkshire acquired CTB International Corp. in 2002. CTB, headquartered in Milford, Indiana, is a designer, Sony VGP-BPX11 Battery
manufacturer and marketer of systems used in the grain industry and in the production of poultry, hogs, and eggs. Products are produced in the United States and Europe and are sold primarily through a global network of independent dealers and distributors, with peak sales occurring in the second and third quarters.Sony VGP-BPL18 Battery
Finance and financial products
Berkshire acquired XTRA Lease in September 2001. XTRA, headquartered in St. Louis, Missouri, is a leading transportation equipment lessor. Sony VGP-BPS18 Battery
XTRA manages a diverse fleet of approximately 105,000 units, constituting a net investment of approximately $1 billion as of December 31, 2004. The fleet includes over-the-road and storage trailers, chassis, intermodal piggyback trailers and domestic containers.Sony VGP-BPL20 Battery
Clayton's finance business, (loans to manufactured home owners), earned $206 million down from $526 million in 2007. Loan losses remain 3.6% up from 2.9%.
In 2003, Pepsi paid Berkshire $10 million to insure against a contest Pepsi held which had a potential 1 billion dollar prize. Sony VGP-BPS20/B Battery
The prize had a very small chance of being won and it was not won by anyone.
In 2008, Berkshire purchased preferred stock in Wrigley, Goldman Sachs, and GE totaling $14.5 billion.Sony VGP-BPS20/S Battery
Berkshire made $3.5 billion on its investment in preferred shares of Goldman Sachs. However, Berkshire and Buffett have been widely criticized for Buffett's defense of Lloyd Blankfein's $13.2 million pay package while they owed the United States Department of Treasury $10 billion in Troubled Asset Relief Program money.Sony VGP-BPL21 Battery
On May 1, 2010 at the Berkshire shareholders meeting, Buffett also defended Goldman over $1 billion in collateralized debt obligation fraud allegations saying that its clients made a calculated risk.
On November 3, 2009, Berkshire Hathaway announced that, using stock and cash totaling $26 billion, Sony VGP-BPS21 Battery
it would acquire the remaining 77.4 percent of the Burlington Northern Santa Fe Corporation, parent of BNSF Railway, that it did not already own. This was the largest acquisition to-date in Berkshire's history.
On March 14, 2011, Berkshire Hathaway announced that it would acquire the Lubrizol Corporation for $9 billion in cash, a deal that was described as one of the largest deals ever for Berkshire Hathaway.Sony VGP-BPS21/S Battery
On August 26, 2011, Berkshire Hathaway purchased $5 billion of preferred shares in Bank of America.In 2007, Buffet had also bought 8.7 million shares, quickly increasing the stake to 9.1 million shares in the midst of the subprime crisis.Sony VGP-BPS21A Battery,Sony VGP-BPS21A/B Battery,Sony VGP-BPS21B Battery,Sony VGP-BPL22 Battery,Sony VGP-BPS22 Battery,Sony VGP-BPS22/A Battery,Sony VGP-BPS22A Battery,Sony VGP-BPL23 Battery,Sony VGP-BPS23 Battery,Sony VGP-BPS23/B Battery,Sony VGP-BPS23/D Battery,Sony VGP-BPS23/G Battery,Sony VGP-BPS23/P Battery,Sony VGP-BPS23/W Battery