Warren Buffett Partnership Letter 1958 Summary

The DOW advanced from 438 to 583...An increase of over 33%...The five partnerships averaged over 38%...Warren feels and reiterates that he can perform better when the stock market is down than when it is up...Warren says he will not focus on market forecasts or predictions...He will be focused on buying undervalued securities...Warren has taken a large position in Commonwealth Trust...The bank has not paid a dividend and has built up its capital position...It has been a solid earner...Commonwealth has another bank interested in buying it, but presently the bank is not interested in selling...The bank is a solid defensive investment...The capital position continues to grow and will be undervalued for several years and will not be realized until a catalyst unlocks the value in the company...If the value is not released early the company will continue to increase in intrinsic value...Warren had been slowly purchasing the bank stock all year, not trying to move the stock price up...Warren purchased up to twelve percent of the bank...A better deal came up at the end of the year and he sold the bank stock and took a new large position in a different investment...The partnership was able to make a substantial profit in the bank and expect to make a better profit from the new investment...He would continue to search for work-out situations...

What can we learn:
Warren would rather the stock market be down...
Warren is not afraid of taking a large position with little or no diversification...
He has much knowledge and detail of his investments in his portfolio...
Commonwealth had a solid capital position...
Warren can, without emption, quickly sell when a better investment comes along...
He is always looking for different and better investments...