The Buffett Partnership returned greater than 38%...The DOW was up over 20%...In the first seven years of the partnership, Warren has outperformed the DOW every year...Warren has outperformed the DOW by over 17% in those seven years...In looking at the other large investment companies that manage other people's money, Warren has outperformed them soundly...Warren again talks about the joys of compounding and over time compounding is such a joyful thing...He again talks about the three categories he classifies his stock picks...General, workouts, and controls...Generals perform much like the DOW...But he expects his picks of general to outperform the DOW...The workout choices are stocks that are involved in mergers, spin offs, and other corporate activism that will cause a change to the company...Warren then looks at the price and sees if there might be an arbitrage play after the announcement, especially in a down market...The controls are long term plays where the partnership has acquired a large position in a company and over time decides whether to become an active shareholder or remain passive...Building up a large position takes time and sometimes for the company requires a change in management to see its value recognized...The partnership is now over $17 million...Warren's position is now $2.4 million in the partnership...
Warren has purchased a position in Texas National Petroleum (TNP)...It is an oil producer...TNP was going to be bought out by Union Oil of California...TNP was going to get three different types of securities, debentures, common stock, and warrants...When looking at the securities TNP was being mispriced by the market...By just purchasing the stock now, you would make a profit in the future as long as the deal was going to pass through the proper legal departments...The deal looked like it would pass by August or September after the April announcement...Borrowing against this type of workout position could make the position more profitable...
Also, Dempster Mill is mentioned again...The purchases started in 1956...It was a general then...By 1961, the partnership owned 30% of the company...The partnership made several more purchases and now hold 70%...The partnership put Harry Bottle in as president...Harry has done a great job and has made things more efficient...The company name of Dempster as were some of the assets...The partnership holds the marketable securities (of the old Dempster) and the cash and is now First Beatrice...The auditors value the securities at market of First Beatrice assets rather that the lower of cost or market...
Dempster has gone from a general to a control over a period of five years...Harry Bottle is now a partner in the partnership...
What can we learn:
Warren continues to outperform the DOW...
The partnership is growing fast and is now $17 million...
Warren's position is $2.4 million in the partnership...
A more detail definition of generals, controls, and workouts is explained...
The partnership has made money on Texas National Petroleum as a workout...
The partnership started with Dempster Equipment in 1956 and by being patient and continuing to purchase the stock, Warren holds 70%, with a substantial profit...The Dempster position has gone from a general to a control...
Warren has purchased a position in Texas National Petroleum (TNP)...It is an oil producer...TNP was going to be bought out by Union Oil of California...TNP was going to get three different types of securities, debentures, common stock, and warrants...When looking at the securities TNP was being mispriced by the market...By just purchasing the stock now, you would make a profit in the future as long as the deal was going to pass through the proper legal departments...The deal looked like it would pass by August or September after the April announcement...Borrowing against this type of workout position could make the position more profitable...
Also, Dempster Mill is mentioned again...The purchases started in 1956...It was a general then...By 1961, the partnership owned 30% of the company...The partnership made several more purchases and now hold 70%...The partnership put Harry Bottle in as president...Harry has done a great job and has made things more efficient...The company name of Dempster as were some of the assets...The partnership holds the marketable securities (of the old Dempster) and the cash and is now First Beatrice...The auditors value the securities at market of First Beatrice assets rather that the lower of cost or market...
Dempster has gone from a general to a control over a period of five years...Harry Bottle is now a partner in the partnership...
What can we learn:
Warren continues to outperform the DOW...
The partnership is growing fast and is now $17 million...
Warren's position is $2.4 million in the partnership...
A more detail definition of generals, controls, and workouts is explained...
The partnership has made money on Texas National Petroleum as a workout...
The partnership started with Dempster Equipment in 1956 and by being patient and continuing to purchase the stock, Warren holds 70%, with a substantial profit...The Dempster position has gone from a general to a control...
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