Controls (30%): It was the Generals Private Owner investments that finally took over the Buffett partnerships. Sanborn Maps, Dempster Mill, Blue Chip Stamps and Berkshire Hathaway all fall into this category. By 1962, by the end of 1962, he had managed $7.2 million. Of that $1 million, it was Buffett`s money. He had 90 investors at that time – compared to the first 7th in 1962, he all merged in partnership and moved from his home to Kiewit – the current Berkshire Hathaway site. Warren invested his first investment in Berkshire Hathaway in 1962 with $US 7.60 per share. At the time, Berkshire was 100% in the manufacture of textiles – men`s shirts, to be precise. Following this announcement, Warren Buffett continued the partnership and crushed the stock market. In 1968, the Buffett partnership made 58.8% against 7.7% for the Dow – the best year of All Time. The structure of Buffett`s portfolio, from the 1969 investor letter, explains how the Capital Allocation of Buffett Partnerships allowed him to “kill the Dow”: 5. Although I much prefer a five-year test, I consider that three years is an absolute minimum to assess performance. Certainly we will have years when partnered performance will be worse, perhaps essentially, than the Dow. If a period of three years or more is working, we should all look for other places where we have our money.
An exception to this last statement would be three years covering a speculative explosion in a bull market. 6. I am not active in predicting stock market or commercial fluctuations. If you think I can do it, or if you think it is essential for an investment program, you should not be in partnership. He led the Buffett Partnerships from 1956 to 1969. Partnerships began with eight investors who invested a total of US$105,000 and Buffett invested US$100 $US. The tariff structure of the partnership was generally not a royalty up to a yield of 6%. Buffett reinvested all of his fees in the partnership.
The funds were liquidated, with investors getting both cash and partnership interest in many of the “control” investments. What he learned in class and in labour proved invaluable when Buffett launched the first Buffett partnership in 1956. Buffett`s Graham-style approach to under-value, with which He began his investment career, laid the foundation for one of the greatest investment avenues in history.