Thursday, December 20, 2007

Warren Buffett Partnership Letter 1967 Summary

The Buffett Partnership outperformed the DOW again...The partnership returned over 35% versus the DOW's return of about 19%...The partnership is rolling...This is the eleventh year and the partnership has beaten the DOW every year and in total by a convincing annual margin of 20%...
The four investment companies of Massachusetts Investment Trust, Investor's Stock, Lehman Corporation, and Tri-Continental have just about been in line with the DOW's average return of 9.3%...Only Lehman has beat the DOW over the 11 year period and Lehman's return was 10.7% and Tri-Continent at 9.9%...
The partnership is now over $68 million in assets...The results of the partnership were again outstanding...
The Controls are $20.2 million gaining $2.9 million for a return of over 14%...
The Generals private owners are are $5.1 million gaining $1.3 million for a return of over 25%...
The Generals relatively undervalued are $19.5 million gaining $14.1 million for a return of over 72%...
The Workouts are $17.2 million gaining $.14 million for a gain of 1%...
Miscellaneous Securities were not mentioned...
Although not mentioned American Express, bought after the salad oil scandal in 1964 is the largest holding and was up to 40% of the portfolio...Warren says one holding was the largest holding ever in the partnership and has outperformed the market in 1964-66...

Warren Buffett Stocks: Only control companies of Diversified Retailing, Berkshire Hathaway, as is Associated Cotton Shops, National Indemnity, and National Fire & Marine (an affiliate of National Indemnity) are mentioned in the report as stock acquisitions...Normally, he will not mention stocks he is currently or going to purchase in the future...
Although not mentioned, Berkshire Hathaway would pay their only dividend in 1967 of ten cents...Also, Diversified Retailing purchases Associated Retailing Inc. based in New York...This also is not mentioned in the letter to partners...
In a semi-annual letter he mentions to the partners he is having a more difficult time to find investment ideas...

What can we learn:
Warren again outperforms the DOW, now eleven years straight...
Generals-relative undervalued returns 72%...

The partnership controls Berkshire Hathway...
Warren focuses on a nontraditional diversification, by holding up to 40% of one stock in the portfolio...The stock is still not mentioned, but we learn later it is American Express, hurt by a scandal...

Warren also mentions he is not closing the partnership...

No comments: