Friday, April 18, 2014

Warren Buffett

Warren Buffett is one of the best-known and the richest investors in the United States and the World. Over the past forty years, he has amassed an impressive track record. In so doing, Mr. Buffett has become one of the richest men in the world. According to Forbes’ 2014 list of richest people, Mr. Buffett came in at number four, with an estimated net worth of $58.2 billion. In 2012, Time magazine named him one of the most influential people in the world. Mr. Buffett built that awesome fortune through a combination of acquiring undervalued assets and making clever deals.

Mr. Buffett does his investing through Berkshire Hathaway, a holding company. The company wholly owns GEICO, BNSF, Lubrizol, Dairy Queen, Fruit of the Loom, Helzberg Diamonds and NetJets, owns half of Heinz and an undisclosed percentage of Mars, Incorporated and has significant minority holdings in American Express, The Coca-Cola Company, Wells Fargo, and IBM. Investors who bought a share of Berkshire back in the early 1960s for less than $20 would have quite a story to tell today. Berkshire's Class A shares sold for $165,265 as of February 3, 2014, making them the highest-priced shares on the New York Stock Exchange.


  • 1930  Warren Edward Buffett is born in Omaha, Nebraska.
  • 1951  Graduates from Columbia University with an economics degree.
  • 1951  Becomes an investment salesman at Buffett-Falk & Co.
  • 1952  Marries Susan Thompson. The couple have three children together.
  • 1959  Introduced to Charlie Munger, who becomes lifelong business partner.
  • 1970  Becomes chairman and CEO of Berkshire Hathaway.
  • 1974  Joins board of Washington Post at request of friend Katherine Graham.
  • 1985  Becomes a billionaire when Berkshire stock tops $2,100 a share.
  • 1996  Berkshire Hathaway begins selling Class B "Baby Berkshire" shares.
  • 2006  Pledges to give away the bulk of his wealth during his lifetime.
  • 2006  Marries Astrid Menks two years after the death of first wife, Susan.
  • 2008 Makes white knight investments in Goldman Sachs and General Electric.
  • 2008  Tops Carlos Slim to become the world's wealthiest person.
  • 2009  Buys Burlington Northern Santa Fe for $34 billion in cash and stock.
  • 2013  Berkshire Hathaway and 3G agree to buy Heinz for $23 billion.

Mr. Buffett is generally associated with value investing. Sometimes value investors are called “buy-and-hold” investors. This is partly true, in the sense that they hold stocks for a long time. But they also sell. Mr. Buffett, for instance, moves deliberately, but he does enter and exit positions over time.

As Mr. Buffett has continued to record strong investment performance, he has become an investment-world icon. Each year, his letter to shareholders is a soapbox for his ideas. He often uses the letter to chastise bad business practices or to make broader societal points. In recent years, he has argued for better corporate governance and more reasonable executive compensation programs, among many other things.

Each spring, Mr. Buffett hosts his shareholders at the Berkshire annual meeting in Omaha, Nebraska. This has become a veritable investment-world Woodstock, with throngs of participants going to see Mr. Buffett and hear his opinions. Mr. Buffett’s success as an investor has provided him with other opportunities. When big companies get into trouble, he is often one of the first folks called. In 1991, Salomon Brothers, a venerable Wall Street firm, ran into a nasty Treasury bond-trading scandal. Mr. Buffett took a large stake in the firm and came on board to help clean things up.
His modest house in Omaha
Dubbed the “Oracle of Omaha,” Mr. Buffett has maintained a reputation as folksy, avuncular investing hero. He still lives in Omaha and, unlike many other very rich people, eschews large armies of handlers or ostentatious displays of his wealth.

The majority of Buffett's fortune is derived from his 21 percent economic interest in Berkshire Hathaway. The billionaire owns 336,000 of the company's Class A shares, as well as 1.5 million Class B shares. In addition to his Berkshire stake, Buffett probably has at least $750 million in cash and other investable assets. In 2010, he reported adjusted gross income of $62.9 million, paying 17 percent in federal income taxes after deducting about $23 million for charitable gifts and local taxes. In his 2011 annual shareholder's letter, he said, "more than 98 percent of my net worth is held in Berkshire stock."

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. 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. 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.

Source:  The Wall Street Journal

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