Tuesday, December 4, 2007

Warren Buffett Starts Buffett Associates Partnership 1956

On May 1,1956 Warren started Buffett Associates...It consisted of seven total partners including Warren...The seven original partners and the amounts they invested were:
Charles S. Peterson (Warren's friend) $5,000
Elizabeth B. Peterson (Mother of Charles) $25,000
Doris B. Wood (Warren's sister) $5,000
Truman S. Wood (Warren's brother in law) $5,000
Daniel Monen Jr. (Warren's friend and an attorney) $5,000
William H. Thompson ((Warren's father in law) $25,000
Alice R. Buffett (Warren's aunt and a school teacher) $35,000
Warren E. Buffett $100
Total of $105,100

Warren received 25% of the profits above six percent annually, with all deficiencies carried forward...This 25% above the six percent would provide Warren an excellent income, if he could provide the kind of returns, he thought he could...Warren ran this and all his original partnerships out of his bedroom...

Warren would start two other partnerships in 1956, also...Ben Graham had retired and was telling some of his former clients to contact Warren...One who contacted him was Homer Dodge, who had an account at Graham Newman...He would put $120,000 in another 1956 partnership...Warren would end 1956 with three partnerships totaling $303, 726...Warren's net worth in 1956 was $140,000...It would increase greatly if he could substantially outperform the market...

Warren would have three partnerships in 1957, add two in 1958, add 1 in 1959 and add one in 1959...He had seven total partnerships at year end 1959...This would the total he would have until he would dissolved the partnership and start Berkshire Hathaway...

No comments: