Warren Buffett's Historical Investments (Part 4)

Warren Buffett's Historical Investments (Part 4)


Freddie Mac: This is a wonderful company that buys residential mortgages from banks and mortgage brokers and securitizes them before selling them to investors. At one time, Buffett owned a ton of this stock, but he had sold it because the nature of the company changed. It got more risky and Buffett hates risk.

F.W. Woolworth Company: This was once one of the largest retail chains in America. Buffett bought it in 1979 for $20 a share against earnings of $6.02 a share, which equates to an initial return of 30%. It had a book value of $41 a share. By 1985 it was at $50 a share, which equates to an annual rate of return of 20%. (Woolworth is no longer a business concern at present.)

Price bought: $20 a share (in 1979)
Earnings: $6.02 a share
Initial return: 30%
Book value: $41 a share
Price in 1985: $50 a share


Gallaher Group Plc: This company owns Gallaher Tobacco Limited, the market leader in the United Kingdom. It makes Benson & Hedges cigarettes. Gallaher Tobacco sold its American tobacco operations in 1994 and said good-bye to all that bad press and possible expense associated with cancer lawsuits. Cigarette products have great profit margins, which mean big bucks. Gallaher owns other things as well, but it is tobacco that reaps the bountiful harvest. The tobacco operations are a classic durable-competitive-advantage business. English tobacco companies don't face the kind of lawsuits American ones do, so the downside risk is smaller. This stock shows up as a Buffett Foundation holding, though when it was purchased and for how much we can't say.

Gannett Company: Warren Buffett's 1994 purchase of shares in Gannett, the largest newspaper publisher in the United States with 99 other newspapers, was made during an advertising recession for $24 a share, or 15x earnings. During the 1999 bubble it traded at 24 x earnings. He could have sold it in 2002 for $76 a share, which would have given him an annual rate of return of 15.2%. Not too shabby.

Price bought: $24 a share (15 x earnings, in 1994 during an advertising recession)
Price in 2002: $76 a share


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)