The DOW increased from 616 to 692 a 22.2% increase...This is the fifth year of the partnerships and the partnerships have easily outdistanced the DOW every year...Warren mentions Arthur Weisenberger's book on investment companies and how they have not come close in total in matching the DOW...
Warren goes on to tell his partners that he breaks down his investments in three classes... Generals, which are undervalued securities and take time for the market to recognize the value of the security...Generals move pretty much with the DOW...The second category is work-outs... These securities after a corporate action might have a difference in the price than what the company is actually worth...Warren also mentions borrowing money to leverage the portfolio...This is the first time leverage is mentioned in his letters...The borrowing will be related to the work-out group... The third category is control...The control stocks is when the partnership controls it or is a large shareholder of the company...The company needs a corporate policy change to get the security to recognize its value...The partnership controls a company called Dempster Mill...Dempster is an ag equipment company...Sales are $9 million and book value is $4.5 million, and working capital is $50 per share...The price is currently $75 per share...Dempster is 21% of the partnerships portfolio...As the markets move higher, it is more difficult to obtain controls, because valuations become high and are not worth the value...
Warren mentions something he was taught by his dad and Ben Graham...That when you have your facts right, you can invest heavily in a investment...This in fact is an act of being conservative, if you have the facts right...
The partnership has moved out of his bedroom and into an office in Kiewit Plaza in Omaha...
He is running ten partnerships totaling over $7 million...
What we can learn:
Warren beats the DOW again...
Warren uses the DOW as his benchmark...
Warren again loads up on one stock, with little diversification...
Warren breaks down his stocks as generals, work-outs, and controls...
Warren talks about knowing the facts when you invest and are focused on a small list of securities...
Warren moves out of his bedroom to Kiewit Plaza in the fifth year of the partnership...
Warren is running ten partnerships totaling $7 million...
Warren goes on to tell his partners that he breaks down his investments in three classes... Generals, which are undervalued securities and take time for the market to recognize the value of the security...Generals move pretty much with the DOW...The second category is work-outs... These securities after a corporate action might have a difference in the price than what the company is actually worth...Warren also mentions borrowing money to leverage the portfolio...This is the first time leverage is mentioned in his letters...The borrowing will be related to the work-out group... The third category is control...The control stocks is when the partnership controls it or is a large shareholder of the company...The company needs a corporate policy change to get the security to recognize its value...The partnership controls a company called Dempster Mill...Dempster is an ag equipment company...Sales are $9 million and book value is $4.5 million, and working capital is $50 per share...The price is currently $75 per share...Dempster is 21% of the partnerships portfolio...As the markets move higher, it is more difficult to obtain controls, because valuations become high and are not worth the value...
Warren mentions something he was taught by his dad and Ben Graham...That when you have your facts right, you can invest heavily in a investment...This in fact is an act of being conservative, if you have the facts right...
The partnership has moved out of his bedroom and into an office in Kiewit Plaza in Omaha...
He is running ten partnerships totaling over $7 million...
What we can learn:
Warren beats the DOW again...
Warren uses the DOW as his benchmark...
Warren again loads up on one stock, with little diversification...
Warren breaks down his stocks as generals, work-outs, and controls...
Warren talks about knowing the facts when you invest and are focused on a small list of securities...
Warren moves out of his bedroom to Kiewit Plaza in the fifth year of the partnership...
Warren is running ten partnerships totaling $7 million...
No comments:
Post a Comment