Warren Buffett – American Business Magnate, Successful Investor and a Star Philanthropist

11/03/202211/13/2022 admin 0 Comments Warren Buffett, Warren Buffett Biography

Warren Edward Buffett more popularly known as Warren Buffett, an American Business Tycoon, Ace Investor and above all a star Philanthropist. Buffett is presently the CEO, Chairman and biggest shareholder of Berkshire Hathaway, an investment company headquartered in Omaha, Nebraska, United States. His investment acumen come in handy for big success in share market and thus make him the most successful investor in the world. Buffett is known as ‘oracle of Omaha’ and is also one of the wealthiest persons in Forbes list of richest people, ranked sixth with net worth of $ 100 billion as of October 2022.

Warren Buffett born on 30^th August 1930, in Omaha Nebraska, USA. Right from teenage he developed immense interest in business and investment. He was investment prodigy at the age of 11 years. He eventually joined Wharton School of the University of Pennsylvania at the age of 17 years and sought transfer to University of Nebraska and graduated from there at 19. He is ardent follower of Benjamin Graham’s theory of Value Investing which he learnt when he was doing post-graduation from Columbia Business School. Warren Buffett was also the student at New York Institute of Finance to abreast himself the fundamental of finance and accounting. After honing his business knowledge, Warren Buffett took the first leap of his business career and started a firm Buffett Partnership Ltd in 1956 and eventually went on to acquire the textile manufacturing firm, Berkshire Hathaway in 1965. He started diversifying into different arena of businesses under this banner. Since then he has not looked back and has been growing by leaps and bounds and adding new feathers to his cap.

Warren Buffett knows the art of earning money and also realizes his social responsibility of being a billionaire. He is a philanthropist of par excellence and is donating for social causes with open heart and mind.

Table of Contents

Early History and Education Pursuits

Warren Buffett was born in a well off family and was the only son of Congressman Howard Buffett and Leila and has two sibling sisters one older and another younger. He spent his early childhood at his birth place Omaha, Nebraska. When his father got elected for the first time out of four terms to United States Congress in 1942, he accompanied him to Washington D.C. Despite belonging to reasonably financially sound family, Warren Buffett wanted to carve a niche for himself at tender age. As a child he started earning money by selling weekly magazines, Soft Drinks and Chew gums. While still at high school he earned money by participating in part time activities such as delivering newspapers, detailing cars, selling stamps, etc. Warren wanted to be self-reliant right from the childhood days.

School Education and his ambition of jumping into business

Warren Buffett got his elementary education at Rose Hill Elementary School., whereupon finished his elementary education, attended Alice Deal Junior High School and completed his high school education from Woodrow Wilson High School in 1947. Buffett was quite keen to enter the business arena after finishing high school but his father was against the idea, rather advised him to first gain knowledge and then do something more constructive.

Warren Buffett hone Entrepreneur skills while still at School

Warren Buffett, the child was quite curious to earn money and was always looking for ways and means to do so. When he was merely seven year old he got inspired from a book, One Thousand Ways to Make $1000. He developed interest in business and investing at quite young age.

His entrepreneurial traits were very much exhibited when he started selling sticks of gum around his neighbourhood, selling them in packs of five for a nickel.

When he was merely 10 year old his father took him to New York Stock Exchange, that day he made up his mind to invest in the share market at earliest possible chance.

In 1941 at the age of 11 he bought six shares (three for himself and three for Sister Doris Buffett) of Cities Service (now known as CITGO) for $38 apiece. Sold the shares after sometime at $40 each. He started monitoring the prices regularly and realized that shares did grow for some time and then became stagnant.

When Buffett was 14 years old, he invested in his father’s company and from the money earned ($1,200), he purchased 40 acre farmland, in an agreement with a Nebraskan farmer. He also launched some small time business ventures like Buffett’s Used Golf Balls, Buffett’s Approval Service a Buffett’s Showroom Shine, etc.

At age 15, used to make $175 monthly by delivering The Washington Post Newspapers door-to-door at 4.30 am. He also worked at his grandfather’s grocery store.

At 17, Warren Buffett and his friend purchased used pinball machine for $ 25 and installed it at local barber shop, waiting customers got involved in the game as they wait for their turn. The business clicked and they earned handsome returns and thus expanded their business by installing many machines at neighborhood barbers’ outlets, and finally sold the business at hiked price of $1,200.

By the time he completed his college education, Warren Buffett he had saved about $10,000. This all indicates that he had fire in his belly from the early age.

University Education

In 1947, Warren Buffett admitted at Wharton School of the University of Pennsylvania at the age of 17 years and sought transfer to University of Nebraska and graduated with Bachelor of Science in Business Administration. He wanted to join the Harvard Business School but was denied admission to the prestigious institute. He is ardent follower of Benjamin Graham’s theory of Value Investing which he learnt when he was enrolled at Columbia Business School for Master of Science in Economics. Warren Buffett was also the student at New York Institute of Finance to abreast himself the fundamental of finance.

Advance qualification enriched Warren Buffett’s knowledge and helped him to thrive on a high trajectory growth path in business.

Primarily at the university level education Warren Buffett was very much scared of Public speaking and he realized that this deficiency would always be a great hindrance in furthering his career in any arena of work. To garner confidence to speak before large gathering, Buffett enrolled at Dale Carnegie Course in Effective Speaking, Leadership Training and the Art of Winning Friends and Influencing People” as young professional in 1952. He acknowledged that $100 spent on this course gave him the most important degree of his life that subsequently transformed his life and played crucial role in all his business successes. This academic certificate is the only one which is displayed at Warren’s office.

Launched debut Business venture – Buffett Partnership Ltd

By 1956, Warren Buffett has accumulated $174,000 as personal savings and thus was in a position to jump into his own business venture and started Buffett Partnership Ltd in 1957 with three partnerships. Same year Buffett purchased a five bedroom house in Omaha, which still is home to him, for $ 31,500. Company gained two more partnerships by 1958 and added one partnership each in 1959 and 1960 thus making it seven partnerships company. He persuaded one of his partners, a doctor to bring in his more colleagues who could invest $ 10,000 each. The doctor persuaded 10 more doctors to join firm as partners and Buffett pooled enough money with mere $100 original investment of his own. Warren Buffett served as general partner (1956-1969) at Buffett Partnership Ltd. He was fascinated to work on Wall Street but was discourage by both, mentor Benjamin Graham and father.

Investment in Sanborn Map Company – Morale Booster

With passage of time, Warren Buffett gained confidence and started activism investing. In 1958, he took the chance to invest 35% of partnership’s assets in Sanborn Map Company which according to him was undervalued at $45 per share, whereas its potential worth was $65. Buffett analyzed that investment in the company would certainly be rewarding in short term. He took the calculated risk and Purchased 23 % of the outstanding shares of the company, and was also made one of the Board Directors of the firm. He managed to control 44% share of the company by allying with other dissatisfied shareholders. Fearing the hostile takeover, company management decided to buy back the shares at fair value. In this transaction Buffett got back 50% return on investment in just two years.

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Berkshire Hathaway caught Buffett’s Imagination

By 1962, Buffett turned millionaire and his partnerships worth stood at about $7. 2 million and his share in it was just above a million dollar. In order to make one identity he merged all his partnerships into one. He started purchasing shares of textile manufacturing firm, Berkshire Hathaway at $7.6 a share. When he started the bulk purchasing of share in 1965, the company offered him shares at discounted price of $14.6 per share whereas actual price of the share stood at $ 19 per share. Warren Buffett took control of the Berkshire Hathaway at board meeting and made Ken Chace as new president of the company. He closed the partnership in 1966 for other lucrative alternatives. He admitted later on that purchasing the textile mill was a wrong decision as textile manufacturing business was declining at the time. He started disinvesting in the gradual manner and sold the last unit of the mills in 1985 and insurance sector was another field where he tried his hand.

In 1967, Warren Buffett invested in private business, Hochschild, Kohn and Co, Baltimore Department Store. Berkshire paid out dividend 10 cents in 1969 for the first time. Buffett winded up the partnership and distributed the assets among partners, including the shares of Berkshire Hathaway. He started writing much talked about letters to shareholders in 1970.

Berkshire started investing in the Washington Post Companyin 1973, famous for publishing Washington Post Newspaper and controlled by Katharine Graham and Buffett also purchased the Buffalo Evening News for $ 32.5 million in 1977 and the rival company Buffalo Courier Express raised antitrust charges and both firms lost lot of money and finally the rival company was also taken over by Buffett.Charlie Mungerjoined Buffett as vice-Chairman at Berkshire Hathaway in 1978

Warren Buffett has always been looking for investment opportunities, next on his radar was the stock of American Broadcasting Company (ABC) which he started purchasing in 1979. He carried out the investment in the company indirectly by assisting Capital Cities in purchasing shares worth $ 3.5 million and struck a deal to get 25 % in the combined company. The merged company was known as Capital Cities/ ABC, the media company owned various Television and Radio stations across American Markets.

Berkshire Hathaway became the largest shareholder of Salomon Inc after claiming a12% stake in 1987 and after three years, Buffett became Director of the company and eventually made the Chairman of Salomon in 1991.

The Coca-Cola Companywas one of the most prosperous companies and had great potential for future growth and Buffet realized this as shrewd investor. He started purchasing Coca- Cola company share in 1988 and gradually ended up buying 7% stake in the company with investment of more than 1 billion which he still holds. This investment proved to be one of the most profitable investments of Buffett’s business career.

Ever growing Net Worth -Turned Billionairein 1986

Warren Buffett had always been ambitious since his childhood days, as a kid he had big ambition to be a millionaire by the age 30, which he accomplished. With time, he broadened his goal and wanted to be a billionaire. He joined the Billionaire club when he turned 56 years and was still earning a humble $ 50,000 salary a year from Berkshire. Interestingly, the average American family earnings per annum in 1986 was the half of what Buffett was getting as salary at the time.

Berkshire Hathaway share value had been growing at fair face and in 1990 he started selling its class A share at about $ 7,200 apiece, which further enhance his financial status as a billionaire. Buffett acquired General Re (Gen Re), the insurance company in 1998 and made it Berkshire’s subsidiary. Things didn’t worked out as per plan, deal presented hurdles which were crossed after much of loss and efforts.

At 66, Buffett’s personal net worth grew reasonably well and his net income was worth $ 16.5 billion. His income doubled in the next six years and his net worth in 2002 was whopping $ 35.7 billion. Around the same time he realized as a billionaire he had some social responsibilities as well and decided to share wealth for social causes. In 2006, Buffett pledged to donate 85 % of his wealth to five foundations over time.

In 2008, Warren Buffett net worth was estimated at $62 billion by Forbes, making him the richest person in the world by leaving behind Bill Gates who had been positioned at top for thirteen years in a row. Somehow in 2009 Gates regained the top rank in Forbes list and Buffett dropped to second position.

As of March 2022, Buffett’s net worth was $ 117 billion, positioned him as the fifth riches person in the world. In the same year he entered in $ 11billion worth of forward contracts and wished to capitalize on strong US dollar against other currencies of the world. Buffett earned handsome lucrative returns of $ 2 billion from the contracts.

At 92, he is still keeping good health and quite active with no signs of stopping in immediate future. Despite being a billionaire, he is quite known for his personal frugality.

Buffett withstood the Spectre of Recession (2007- 2008)

With the bursting of the housing bubble in America in 2007 and 2008, it was quite a tough time for the financial markets. Buffett termed the downturn in financial market as ‘Poetic Justice’. Berkshire Hathaway too had to bear the brunt of economic slowdown as the company witnessed about 80 per cent drop in earning in third quarter of 2008. Berkshire managed to acquire 10% Stake in Goldman Sachs. Buffett also assisted Dow Chemical to pay $ 19 billion for the takeover of Rohm & Haas. With the investment of $ 3 billion, he became the single largest equity holder of amalgamated company, thus playing crucial role during the testing times in debt and equity market.

In 2008, he attained the top position in Forbes list of wealthiest persons in the world with net worth whopping $62 billion, and leaving behind his friend Bill Gates to second position. Though in 2009, Bill Gates regained the top position and Buffett ranked second in the list. Both the friends witnessed diminishing values with Gates with net worth of $40 billion and Buffett with net assets of $37 billion. Buffett’s net worth fell by $25 billion in a year from 2008.

Despite the odds, Buffett decided to purchase the preferential shares offered by General Electric (GE), this entailed special incentives. He agreed to buy 3 billion shares of the company at $ 22 per share over a period five years, and also got 10% dividend as agreed upon.

Buffett retained the share of Coca Cola company which he said was a mistake as stock’s rate peaked at $ 86 in 1998 but started declining in the later years. He though sold some stakes in Procter & Gamble Co and Johnson and Johnson in 2009. Buffett admitted in one of annual shareholders address meeting that it is bit difficult to decide when to buy or sell shares.

Berkshire Hathaway managed to sail through the turbulent waters under the dynamic leadership and vision of Warren Buffett.

Berkshire Hathaway capitalized on Appreciated Stock

The value of Berkshire Hathaway’s shares appreciated tremendously and hit a new high $ 200,000 apiece in 2014 for the first time in its glorious history. Company’s capitalized valued stood at about $330 billion. Though Buffett was not personally benefitted out of it as by this time he had already donated much of his stocks for social causes. He still hold more than 300,000 shares worth exceeding $64 billion. Berkshire was penalized in 2014 and fined dollar one million for failing to report 2013 purchase of USG Corporation shares as is mandatory as per rules.

Swiss Re was in Buffett scheme of things in 2014, invested $2.6 billion in the company with rights to own more than twenty per cent stake. Same year struck a cash and stock deal of $34 billion to lay claim on Burlington Northern Santa Fe Corp, mainly to diversify from the financial industry. As per market capitalization, Berkshire Hathaway stood as eighteenth largest corporation across the world in Financial Times Global 500 survey report. Investment in ConocoPhilips was off the mark and hence Buffet disinvested in the company.

Federal Reserves approved Goldman Sachs to buy back Berkshire’s preferred stock in Goldman in 2011, whereas Buffett was grudged to sell back the stock, which was paying handsome dividend.

Although Buffett was averse to invest in technology companies but somehow he was influenced by the dynamics of International Business Machine Corp (IBM). With the big investment worth around 11 billion, Buffett bought 64 million shares of (IBM) in eight months starting from mid-2010. He became the largest stake holder with 5.5 % alongside other investor State Street Global Advisors.

Buffett acquired Media General, the newspaper publishing company, owned 63 Newspapers across South – eastern America in 2012. Buffett’s BH Media Group also bought Press of Atlantic City and it became its thirtieth daily Newspaper take over. Thereafter, Berkshire also purchased other newspapers like The Tulsa World, Virginia, U.S. and Roanoke Times.

Buffett opined that U. S. evolved as economic superpower but had yet to learn how everybody have enough share in the bounty. There should be no one left far behind when the nation is prospering.

Buffett skills and business acumen helped a great deal for Berkshire to regain pre- recession accolades by making $6.5 million in the second quarter of 2014, the highest ever it made in any quarter.

Personal Vital Information and Brief Biography

As an 18 year old boy, Warren Buffett had a crush on a local Omaha girl, Betty Gallagher, but to his dismay, she already had a boyfriend at the time. In order to win her heart, Buffett brainstormed as to how he could overshadow the rival and started playing ukulele which eventually became a lifelong passion for him. Although he could not succeed in his endeavour, yet his music interests played instrumental role in his marriage to Susan Thompson. Buffett never misses an opportunity to play on the instrument including the stockholders meetings of Berkshire Hathaway.

Warren Buffett and Susan Thompson married in 1952. Wedlock resulted into three off springs, Susan Alice (daughter born in1953), Howard Graham (1954) and Peter Andrew (1958). After 25 years happily married life, couple started living separately in 1977 while still married till the death of Susan Buffett in 2004.

Buffett entered the wedlock second time in 2006 on his 76^th Birthday, married Astrid Menks, a longtime companion since 1977 and was 16 years younger to him. More interestingly, Susan was quite instrumental in their aspiring relationship and three were in very good terms.

He earned a moderate salary of $100,000 in 2006 which was considerably less as compare to the chief executives of other reputed company at the time. Buffett is well known for his personal frugality, he still live in same house in the central Dundeeneighbourhood Omaha which he purchased in 1958 for $ 31,500. Another house which he bought in 1971 in Laguna Beach, California at the cost of $ 150,000 that fetched him $ 7.5 million in a selling deed in 2018.

Buffett is quite fond of playing bridge, and his partner in game is none less than Bill Gates. He managed to spare 12 hours a week for the game. For the sake of enjoying the game, he sponsored a bridge match named Buffett Cup. The team are chosen by invitation with five male teams and one female team provided by each country. It was modeled on Ryder Cup of Golf and held immediately before the prestigious game and in the same city.

Nebraska Football was yet another passion for Buffett and he attends as many games as his busy schedule permits. He was named honorary assistant coach of Nebraska and watched the game on the field in 2009 against Oklahoma.

Buffett has the distinction of being elected to the American Philosophical Society in 2009. Though raised as staunch Christian, but he describe himself as agnostic. He is reported to not carrying the mobile phone, having no computer on his desk and drove his own car in 2006. But in contrast at the 2018 Berkshire shareholder meeting he stated that for him, Google is preferred search engine and in 2013 he owned a Nokia Flip phone and sent one email message in his whole lifetime.

Buffett is master class story teller and mix business discussion with humour His speeches at Berkshire Hathaway’s annual shareholder meeting are much sought after. The grand event draw more than 20,000 shareholders from America and foreign countries.

Even at the age of 92 years his fondness for coca cola has not diminished and he consume fair quantity of the drink daily. Buffett also holds sizeable shares in the company. He agreed to use his resemblance on cherry coke products in China without getting any compensation.

Most amazing, Warren is famous for investing in products he uses in his day to day life. He invested in Fruit of the Loom because he liked their Shirts and Underwear. He is stake holder in Chinese company Trands Co. as he love the suits of specific brand. Madam Li, the owner of the company seldom charged any money for suits (minimum cost $880), even though Buffett has always asked for the bill. He consume coca cola drink and has stake in the company so is the case with Dairy Queen ice cream.