The DOW decreases from 679 to 616 a drop of 9.3%...The NYSE had 653 stocks dropping in price and 404 increasing...A number of new partners were added to the Buffett Partnership(s) in the year 1960...Warren again reiterates his stock picks will do better when the DOW drops than when it increases...In 1960 Warren is running seven partnerships...He mentions he would like to combine the seven partnerships into one...Also, some partners are wanting to add money in the middle of the year...Warren has told these investors they will be paid six percent until year end...Their new money will be invested at the first of the year when those dollars will be added to the partnership(s)...
Warren mentioned last year that one stock made up 35% of the partnerships assets...The company is Sanborn Map...The company makes detail maps of cities in the U.S....The maps have detailed information including infrastructure beneath the cities including locations of fire hydrants and water mains...Insurance companies like this information which helps them underwrite their fire policies...City maps need updating frequently as cities grow and expand...Sanborn Map is more or less a monopoly, until around 1950 and now is seeing more competition...Sanborn Map's board is filled with insurance men...Sanborn Map earnings have fallen from $500,000 in the 1930's to $100,000 in the 1958 and 1959...In the 1930's Sanborn started investing in the stock market and now have a large equity and fixed income portfolio...Now the investment portfolio was worth more than the stock price...Sanborn Map had $2.5 million in sales and had marketable securities of $7.5 million...Nine of the fourteen board members were insurance men...These nine board members held only 46 shares of the 105,000 shares outstanding...Two other outside directors held ten shares each...Two directors were officers and held 300 shares in total...The only director who held any size shares was a son of a past deceased president of the company...The son's mother, a widow owned 15,000 shares...The son made a bid to become a top officer of the company, which did not work out...The son now unhappy resigned...The mother also was unhappy with the company's current situation...A bid was made by the partnership for the 15,000 shares and was accepted...The mother and son, as well as the partnership know that there is a hidden asset in the investment portfolio...
The board did not want any change...A plan evolved from a consulting company to recognize the value of the investment portfolio...It was approved by the SEC...Fifty percent of the shareholders were bought out with the securities from the investment portfolio...There was some shareholder activism that created some excitement...
Warren calls the Sanborn Map situation a "control situation"...He states most of the partnerships money will normally be in basically two situations...One is undervalued securities which will be tied up for a period, until the market recognizes the value of the underlying assets... Two will be special situation stocks, where some corporate-shareholder activism will increase the price rather than the market...
What can we learn:
Warren easily beats the DOW...He continues to use the DOW as his benchmark...
Warren is adding new partners and the existing partners are adding new money...
This years big reason for the over performance is Sanborn Map...
Warren, again knows the details of the company (Sanborn Map)...
Warren is not diversified...
Sanborn's board did not want to recognize the value of the company or did not recognize the value of their company...
Sanborn is broken up and the company's value is recognized...
Warren mentioned last year that one stock made up 35% of the partnerships assets...The company is Sanborn Map...The company makes detail maps of cities in the U.S....The maps have detailed information including infrastructure beneath the cities including locations of fire hydrants and water mains...Insurance companies like this information which helps them underwrite their fire policies...City maps need updating frequently as cities grow and expand...Sanborn Map is more or less a monopoly, until around 1950 and now is seeing more competition...Sanborn Map's board is filled with insurance men...Sanborn Map earnings have fallen from $500,000 in the 1930's to $100,000 in the 1958 and 1959...In the 1930's Sanborn started investing in the stock market and now have a large equity and fixed income portfolio...Now the investment portfolio was worth more than the stock price...Sanborn Map had $2.5 million in sales and had marketable securities of $7.5 million...Nine of the fourteen board members were insurance men...These nine board members held only 46 shares of the 105,000 shares outstanding...Two other outside directors held ten shares each...Two directors were officers and held 300 shares in total...The only director who held any size shares was a son of a past deceased president of the company...The son's mother, a widow owned 15,000 shares...The son made a bid to become a top officer of the company, which did not work out...The son now unhappy resigned...The mother also was unhappy with the company's current situation...A bid was made by the partnership for the 15,000 shares and was accepted...The mother and son, as well as the partnership know that there is a hidden asset in the investment portfolio...
The board did not want any change...A plan evolved from a consulting company to recognize the value of the investment portfolio...It was approved by the SEC...Fifty percent of the shareholders were bought out with the securities from the investment portfolio...There was some shareholder activism that created some excitement...
Warren calls the Sanborn Map situation a "control situation"...He states most of the partnerships money will normally be in basically two situations...One is undervalued securities which will be tied up for a period, until the market recognizes the value of the underlying assets... Two will be special situation stocks, where some corporate-shareholder activism will increase the price rather than the market...
What can we learn:
Warren easily beats the DOW...He continues to use the DOW as his benchmark...
Warren is adding new partners and the existing partners are adding new money...
This years big reason for the over performance is Sanborn Map...
Warren, again knows the details of the company (Sanborn Map)...
Warren is not diversified...
Sanborn's board did not want to recognize the value of the company or did not recognize the value of their company...
Sanborn is broken up and the company's value is recognized...
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