Warren Buffett

"Perhaps we need the occasional recession to reassure ourselves that nemesis is still at work. As Warren Buffett unforgettably put it, “It’s only when the tide goes out that you learn who’s been swimming naked.”"

"It’s why, to avoid lapsing into the shared-language and shared-thinking of bankers, Warren Buffett writes Berkshire Hathaway annual reports as though addressing his sister Bertie."

"You shape your houses and then your houses shape you. —Winston Churchill The most powerful force in the universe is compound interest. —Albert Einstein Being a CEO has made me a better investor, and vice versa. —Warren Buffett"

"Buffett, after a long period of relative inactivity stretching back to the immediate aftermath of 9/11, has had one of the most active periods of his long career. Since the fourth quarter of 2008, he has deployed over $80 billion (over $15 billion of it in the first twenty-five days after the Lehman collapse) in a wide variety of investing activities: • Purchased $8 billion of convertible preferred stock from Goldman Sachs and General Electric • Made a number of common stock purchases (including Constellation Energy): $9 billion • Provided mezzanine financing to Mars/Wrigley ($6.5 billion) and Dow Chemical ($3 billion) • Bought various distressed debt securities in the open market: $8.9 billion • In Berkshire’s largest deal ever by dollar value, bought the 77.5 percent of Burlington Northern that he didn’t already own for $26.5 billion • Acquired Lubrizol, a leading, publicly traded lubricant company for $8.7 billion • Announced a sizable ($10.9 billion) new investment in IBM stock Over the same period, John Malone has been quietly conducting an extended experiment in aggressive capital allocation across the disparate entities that were spun out of TCI’s original programming arm, Liberty Media. In the depths of the financial crisis, Malone: • Implemented a “leveraged equity growth” strategy at satellite programming giant DIRECTV—increasing debt and aggressively repurchasing stock (over 40 percent of shares outstanding in the last twenty-four months). • Initiated a series of moves across the former Liberty entities, including the spin-off of cable programmer Starz/Encore and a debt-for-equity swap between Liberty Capital (owner of Malone’s polyglot collection of public and private assets) and Liberty Interactive (home of the QVC shopping network and other online entities)."

"See’s: The Turning Point A pivotal investment in Buffett’s shift in investment focus from “cigar butts” to “franchises” was the acquisition in 1972 of See’s Candies. Buffett and Munger bought See’s for $25 million. At the time, the company had $7 million in tangible book value and $4.2 million in pretax profits, so they were paying a seemingly exorbitant multiple of over three times book value (but only six times pretax income). See’s was expensive by Graham’s standards, and he would never have touched it. Buffett and Munger, however, saw a beloved brand with excellent returns on capital and untapped pricing power, and they immediately installed a new CEO, Chuck Huggins, to take advantage of this opportunity. See’s has experienced relatively little unit growth since it was acquired, but due to the power of its brand, it has been able to consistently raise prices, resulting in an extraordinary 32 percent compound return on Berkshire’s investment over its first twenty-seven years. (After 1999, See’s results were no longer reported separately.) During the last thirty-nine years, the company has sent $1.65 billion in free cash to Omaha on an original investment of $25 million. This cash has been redeployed with great skill by Buffett, and See’s has been a critical building block in Berkshire’s success. (Interestingly, purchase price played a relatively minor role in generating these returns: had Buffett and Munger paid twice the price, the return would still have been a very attractive 21 percent.)"

"As the Nobel Prize–winning chemist Louis Pasteur once observed, “Chance favors . . . the prepared mind,” and speaking of prepared minds, let’s conclude by looking at how the two remaining active outsider CEOs, Warren Buffett and John Malone, navigated the financial meltdown that followed the September 2008 collapse of Lehman Brothers. As you would expect, both pursued dramatically different courses from their peers’. At a time when virtually all of corporate America was sitting on the sidelines, shepherding cash, and nursing ailing balance sheets, these two lions in winter were actively on the prowl."

"Warren Buffett has proposed a simple test of capital allocation ability: has a CEO created at least a dollar of value for every dollar of retained earnings over the course of his tenure? Buffett’s metric captures in a single number the collective wisdom and folly of decision-making over the course of an entire career. Sadly, it is a tougher test than it sounds and not surprisingly, these outsider CEOs passed with flying colors, as table A-1 demonstrates. TABLE A-1 Outsider CEOs and the Buffett test"

"It’s almost impossible to overpay the truly extraordinary CEO . . . but the species is rare. —Warren Buffett You are what your record says you are. —Bill Parcells Success leaves traces. —John Templeton"

"Warren Buffett looked back on his first twenty-five years as a CEO and concluded that the most important and surprising lesson from his career to date was the discovery of a mysterious force, the corporate equivalent of teenage peer pressure, that impelled CEOs to imitate the actions of their peers. He dubbed this powerful force the institutional imperative and noted that it was nearly ubiquitous, warning that effective CEOs needed to find some way to tune it out."

"The times, like now, were so uncertain and scary that most managers sat on their hands, but for all the outsider CEOs it was among the most active periods of their careers—every single one was engaged in either a significant share repurchase program or a series of large acquisitions (or in the case of Tom Murphy, both). As a group, they were, in the words of Warren Buffett, very “greedy” while their peers were deeply “fearful.”a a. Author interview with Warren Buffett, July 24, 2006."

"This single-minded cash focus was the foundation of their iconoclasm, and it invariably led to a laser-like focus on a few select variables that shaped each firm’s strategy, usually in entirely different directions from those of industry peers. For Henry Singleton in the 1970s and 1980s, it was stock buybacks; for John Malone, it was the relentless pursuit of cable subscribers; for Bill Anders, it was divesting noncore businesses; for Warren Buffett, it was the generation and deployment of insurance float."

"Tom Murphy and Dan Burke were probably the greatest two-person combination in management that the world has ever seen or maybe ever will see. —Warren Buffett"

"Henry Singleton has the best operating and capital deployment record in American business . . . if one took the 100 top business school graduates and made a composite of their triumphs, their record would not be as good as Singleton’s. —Warren Buffett, 1980 I change my mind when the facts change. What do you do? —John Maynard Keynes"

"Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks. —Warren Buffett"

"If Warren Buffett had set out to make some new friends, he would not have acquired the weekday-only Buffalo Evening News and launched a Sunday edition. That ac¬ tion broke up a comfortable modus vivendi with the News’s rival paper, the Buffalo Courier-Express. For many years, the Courier-Express had sur¬ vived on the strength of its Sunday monopoly, while the News dominated the circulation battle during the balance of the week."

"Financial theorizing held little interest for Ross Perot, however. Like other billionaires who grew up far from New York, such as John D. Rockefeller Sr. and Warren Buffett, he was skeptical of Wall Street. One of the few investment bankers who impressed Perot was Charles Allen of Allen & Company. Perot paid him the supreme compliment by saying that like his own father, Allen had “the style of the great cattle traders.”27 In the end, Perot awarded the underwriting mandate to the most opti¬ mistic firm of the lot. R. W. Pressprich and Co., which he had never heard of until then, assured him that EDS could be launched at 100 times earnings."

"When one reads that “Warren Buffett” has bought, [for example], an interest in General Foods, it usually means that an insurance subsidiary of Berkshire Hathaway—using its reserves built up against future claims—has made the investment, which can cost more than Berkshire Hathaway, the parent company, could readily afford. . . .The same maneuver, using insurance companies, is per¬ formed by such operators as Henry Singleton, Larry Tisch, Carl Lindner and Saul Steinberg, among others.63"

"Consider, for example, a company capitalized with $200 million and generating $800 million of annual premiums. If the insurer earns 6 percent on the result¬ ing investment portfolio of $1 billion, or $60 million, its return on invest¬ ment (before expenses and taxes) is $60 million over $200 million, or 30 percent. This leverage is particularly powerful in Berkshire Hathaway’s case. Typically, bonds represent the bulk of an insurance company portfo¬ lio, but Buffett has emphasized equities, which produce higher rates of re¬ turn over time. Further magnifying the power of leveraging Berkshire Hathaway’s portfolio are Warren Buffett’s exceptionally high investment returns."

"Recognizing that an insurance company could be turned into (in John Train’s words) “a sort of super margin account,”60 Warren Buffett got into the property and casualty business soon after switching his focus from money management to enterprise building."

"All the successful people I ever met were fanatics about focus. Sam Walton, who built Walmart, thought only about stores day and night. He visited store after store. Even Warren Buffett, who today is my partner, is a man super focused on his formula. He acquires different businesses but always within the same formula, and that’s what works. Today our formula is to buy companies with a good name and to come up with our management system. But we can only do this when we have people available to go to the company. We cannot do what the American private equity firms do. They buy any company, send someone there, and constitute a team. We only know how to do this with our team, people within our culture. Then, focus is also essential.22 Our CEOs’ business"

"Our final advantage is the hard-to-duplicate culture that permeates Berkshire. And in businesses, culture counts. —Warren Buffett, 2010 Berkshire Hathaway"

"I would say this, I don’t think I’ve ever seen a better developed management group than the one that Jorge Paulo Lemann has developed over the years in Brazil, and he is an incredible guy. —Warren Buffett, Squawk Box"

"The special considerations arising from the interplay of multiple businesses under a single corporate roof is the subject matter of Corporate Strategy. This is beyond the scope of the current edition of this book.11 I hope to address that in later editions, as the tools of Power Dynamics yield useful insights. Leadership. The notion of Power (and the impact of its lack) is what underlies Warren Buffett’s view…"

"On September 27, 2008, the famous American investor Warren Buffett announced his investment in BYD shares. Buffett's investment to some extent represents global recognition of BYD's brand value, which is of strategic significance for accelerating the promotion of BYD’s new energy vehicles and other environmental protection products in North America, Europe, and worldwide."

"First, Warren Buffett invested in BYD. The might of the "Oracle of Omaha" in the stock market is formidable. With his support, BYD soared from a newcomer to a phoenix, and it was easy for Wang Chuanfu to become the richest man. Buffett's favor was not because he had much affection for BYD, but because he recognized the prospective significance of BYD’s position in the new energy sector. Thanks to Buffett, BYD's stock price skyrocketed more than eightfold from around 8 Hong Kong dollars the previous year. In a short period, the name "Buffett" increased Wang Chuanfu's wealth by about 29 billion yuan. No wonder everyone considers Buffett a benefactor to Wang Chuanfu."

"Take Addtech as an example: each business area is incentivized to grow—both organically and through acquisitions—but must also compete for internal capital. Similarly to Warren Buffett at Berkshire Hathaway, the CEO Niklas Stenberg acts as the overarching capital allocator, ensuring that the capital flows to the highest-return opportunities. This pushes business areas to sharpen their cases, only presenting their best opportunities."

"There are signs that Warren Buffett, Apple’s biggest single investor, *is* nervous. In early 2023 he sold his stake in TSMC, worth nearly $5 billion, citing geopolitical risks. Buffett called the Taiwanese chipmaker “one of the best managed and important companies in the world,” but added: “I don’t like its location, and I reevaluated that.” Then, between August and November 2024, Buffett slashed his stake in Apple from $178 billion to $69.9 billion, a reduction of nearly two-thirds. The moves went unexplained, but the logic behind his sale of TSMC stock is just as valid for Apple."

"At Sky, John Fellet regrets that Heatley and other entrepreneurs like him, including Alan Gibbs, Trevor Farmer, Sir Michael Fay and David Richwhite, created thousands of jobs ‘then almost as quickly, they packed up and left or went underground’. Partly, he thinks that tall poppy syndrome, which as an American he had never heard of before arriving in New Zealand, played a part. ‘They were similar in not wanting attention drawn to themselves and maybe that’s just the Kiwi way, but in the US, Craig Heatley and Trevor Farmer would be actively involved in major corporations. They would be more like the Warren Buffets, adding shareholder value and, yes, enriching themselves, but also enriching the New Zealand economy. Now I am sure that they have investments that do enrich the economy but they all seem to be off on their islands, Craig on Moturua, Richwhite on Mercury Island, and it’s a pity because that kind of brain power is a huge driver of economic growth and to have it sitting on the sideline at too young an age, especially in Craig’s case, is a shame.’"

"Warren Buffett: "It's not worth doing well something that, to start with, is not worth doing.”"

"Was it ever, moreover, for Antoine Bernheim? When he is not at his office on Boulevard Haussmann, he devotes most of his leisure time to his "second life": his bridge tournaments in Biarritz or Crans-Montana, Switzerland... A way to stay "in the loop" by indulging in the favorite game of American billionaires Warren Buffett or Bill Gates."

"What I stumbled upon was this. Desperate to figure out how to lead a life that was more like his, I began constantly to ask myself one simple question: “What would Warren Buffett do if he were in my shoes?”"

"This became my own goal: not to be Warren Buffett, but to become a more authentic version of myself. As he had taught me, the path to true success is through authenticity."

"Alice Schroeder’s The Snowball: Warren Buffett and the Business of Life and Tap Dancing to Work: Warren Buffett on Practically Everything, 1966–2013 by his friend Carol Loomis,"

"Warren Buffett, quoting Henry Ford, often talks about the importance of keeping all your eggs in one basket,"

"Buffett in Berkshire Hathaway Letters to Shareholders, 1965–2013. Another marvelous glimpse inside the mind of a master is Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger,"