Warren Buffett's Historical Investments (Part 1)

Warren Buffett's Historical Investments (Part 1)

These are companies Warren Buffett invested either personally, through his foundation, or through Berkshire Hathaway. Be aware that simply because Warren Buffett has made investments in these companies or they met his selective criteria doesn't mean he would buy them today. He bought when the price was right. Remember: You want to identify the company with a durable competitive advantage and then let the price of its shares determine when you pull the trigger. The right price may come tomorrow or it may come five years from now.

Also keep in mind that at times Mr. Market is wildly enthusiastic about some of these businesses and prices them high. On other days he will be very pessimistic about their prospects and price them low. You are interested in the days that Mr. Market is pessismistic, not the others.



Amerada Hess: This is an oil company. Buffett made this investment based on asset evaluation. He multiplied the price of oil by the number of barrels it had in the ground and found that it was selling at a significant discount. He paid $26 a share and we believe he sold it a year later at approximately $50 a share. Not too shabby.

Price paid: $26 a share (Price selling at a significant discount based on asset evaluation.)
Price sold: $50 a share (Sold a year later)



American Broadcasting Companies: ABC is a television network that in the early seventies had one of the most durable competitive advantages around. We believe Buffett started buying it during an advertising recession in 1978 for approximately $24 a share and sold it in 1980 for approximately $40 a share. After it merged with Capital Cities in 1984, it merged with Disney.

Price paid: $24 a share in 1978 (during an advertising recession)
Price sold: $40 a share in 1980



American Express: This is a major financial services company that just about does it all. But its strength is travel-industry-related services for businesses, and at this, it's king. Its credit card business is a kind of toll bridge that makes money every time someone uses an American Express card. Buffett first invested in the company in the sixties during the salad-oil scandal that destroyed its equity base but not its core business. Buffett sold out after the company recovered.

Price bought: In 1960s during the salad-oil scandal when its equity base destroyed.
Price sold: After the company recovered.


In the early nineties AmEx started to have problems. From September 1991 to September 1994 the company lost approximately 2.2 million individual card users and saw its share of the total credit card market drop from 22.5% in 1990 to 16.3% in 1995. This was caused in part by AmEx's push to become a one-stop shop for all your financial needs. In diversifying into different financial products, it lost focus on its credit card operations - the bread and butter of its business. Keep in mind that businesses with a durable competitive advantage are sometimes managed by teams that ignore the wonderful underlying parts of the business that made the company great in the first place. In AmEx's case, Harvey Golub rode to the rescue as the company's new CEO. Buffett jumped on Golub's wagon and began buying the stock. Remember, you invest not only in the company, but also in the people who run it. Buffett made his 1994 purchase right before the spin-off of Lehman Brothers (an investment bank). AmEx gave its shareholders one-fifth of a share in Lehman for every share of AmEx they owned. The one-fifth Lehman was worth approximately $4. Buffett paid $26 a share for the AmEx and then got $4 a share in Lehman stock via the spin-off. Today his AmEx stock is worth approximately $166 a share, which equates to a 30% compounded annual rate of return. When it comes to the American Express card, Warren is happy that people don't leave home without it.

Price bought: $26 a share (In 1994, when AmEx was having problems.)
Price subsequently: $166 a share (30% compounded annual rate of return)



Anheuser-Busch: This is the world's largest brewing company. It has what Buffett calls a durable competitive advantage: You order your beer by brand name, and brand names it has aplenty: Budweiser, Bud Light, Busch, Michelob, Red Wolf lager, ZiegenBock Amber, and O'Doul's. It gets great returns on equity and total capital and has strong earnings growth. You need a recession or panic sell-off to get a buying opportunity on this one. Anheuser-Busch is a Buffett Foundation holding.

Price bought: You need a recession or panic sell-off to get a buying opportunity on this one.
Great ROE, ROTC and strong earnings growth.



Related topics:
Warren Buffett's Historical Investments (Part 1)
Warren Buffett's Historical Investments (Part 2)
Warren Buffett's Historical Investments (Part 3)
Warren Buffett's Historical Investments (Part 4)
Warren Buffett's Historical Investments (Part 5)
Warren Buffett's Historical Investments (Part 6)
Warren Buffett's Historical Investments (Part 7)
Warren Buffett's Historical Investments (Part 8)
Warren Buffett's Historical Investments (Part 9)