Warren Buffett

Warren Edward Buffett (Omaha, Nebraska, August 30, 1930) is an American investor and businessman. He is considered one of the largest investors in the world, as well as being the largest shareholder, Chairman and CEO of Berkshire Hathaway. In 2017, he ranked third on the list of the world's richest people compiled by Forbes magazine, behind Bill Gates and Amazon founder Jeff Bezos, with an estimated fortune of 87 billion. of dollars.

Known as the "Oracle of Omaha," Buffett is an adept at value investing and leads an austere lifestyle, despite his immense wealth. His annual salary in 2006 was approximately US$100,000 , which is on the low end of salaries compared to other top executives from many companies. He lives in the same house, in downtown Omaha, that he bought in 1958 for US$31,500 .

Buffett is also a well-known philanthropist. In 2006 he announced a plan to donate his fortune; 99% of it will go to the Bill & Melinda Gates Foundation. In 2007 he was included in Time magazine's list of the 100 most influential people in the world. Buffett is also a member of the Board of Trustees of Grinnell College and other companies.

Biography

Warren Buffett was born on August 30, 1930 in Omaha, Nebraska, the only son in a family of three brothers. His father was Howard Homan Buffett, a stockbroker and member of the United States Congress. As a young man he delivered newspapers to earn some money and this probably sparked his interest in the media, where he subsequently made several successful investments, including in the Washington Post.

Warren tried various businesses part-time while attending the Wharton School of the University of Pennsylvania, but his career took a decisive boost after graduating from the University of Nebraska. He also studied economics at the Columbia Business School, where he was taught by Benjamin Graham, known as the father of value investing, in English value investing. Buffett was the only one to get an A+ in one of Graham's classes at Columbia University, both Buffett's father and Graham himself did not want the young man to go to Wall Street, and Graham turned down Warren's offer of work for him for free. Some time later he would reconsider the decision and finally call him.

Professional career

From 1950 to 1956 Buffett increased his capital from $9,800 to $140,000 In 1952 he began working with Benjamin Graham, in an office where they spent their days analyzing stock market reports. Both practiced the investment tactic of value investing (investing in companies with solid fundamentals and always in the long term), but they did so with some differences. While Graham was rigorously based on a company's balance sheet and revenue, Warren was also very interested in other, more intangible elements; such as the management team or the brand.

Graham eventually retired and Buffett started a limited partnership in Omaha, using capital from his family and friends. The partnership was a success and Buffett says that he has since achieved an average annual profit of 23 percent, more than the market average.

In 1956, with $100,000 of his own and other $105,000 of 7 different partners, he founded Buffett Associates, Ltd. By the end of that year, the company managed capital of $300,000. Until 1961 Buffett achieved a return of 251%, while the Dow Jones, the reference index of the American stock market, only obtained 74.3%.

In 1962, the company had a capital of US$7.2 million, of which; a million belonged to Buffet. That year he decided to integrate all the partnerships into Buffett Partnerships, Ltd. and increased the entry requirements for new investors to $100,000. That same year Charles Munger returned to his native Omaha from California. Buffett established a friendship and business collaboration with Munger that continues to this day. In 1972, Buffett Partnerships, Ltd.'s assets had grown by 1,156% versus the Dow Jones's growth of 123%.

In 1965 Buffett acquired part of the Berkshire Hathaway textile firm, under which he would later unite all his businesses, and soon began investing in insurance companies. His beginnings were not brilliant. The company was in an industry facing real competitive challenges and high production costs.

In 1969, he liquidated Buffett Partnerships, Ltd., keeping only Berkshire Hathaway and Diversified Retailing shares. He needed a lot of capital to get the battered Berkshire afloat.

In 1970, Buffett gave another twist by converting his emporium; while textiles contribute a meager $45,000, the banking and insurance divisions contribute $2.6 and $2.1 million.

In 1971 he bought See's Candy, a gourmet chocolate company for $30 million. The largest operation to that date undertaken by the group, until the purchase of the Burlington Northern Santa Fe railway company for 44,000 million in 2009.

In 1976 he joined the insurance company GEICO. Benjamin Graham died that same year. At the end of the 70s, Buffett's fame was such that rumors of interest on the part of the genius in some company almost automatically triggered his value.

In the 1980s and 1990s, Berkshire purchased Nebraska Furniture Mart, Scott & Feltzer and invested in Coca-Cola.

Buffett befriended Charles T. Munger, an attorney and investor, and Munger joined Berkshire Hathaway; as vice president, alter ego and friend. Warren Buffett is always the first to acknowledge the contribution that Charlie Munger has made to Berkshire Hathaway.

Charles Munger is passionate about economic history. In 1994 Munger delivered a speech at the University of California (USC Business School) during that year's graduation ceremony.

At the turn of the century, many doubted Buffett for his low returns, but they came face to face with reality with the dot-com tech bubble. Warren never invested in products that were too complex or that he didn't understand, which kept his business safe from the swings of the stock market.

Buffett later made one of his biggest purchases, jointly with Mars. On April 28, 2008, he announced the creation of the largest candy and gum company in the US, worth $23 billion. This purchase would give Warren Buffett - through Berkshire - 10% in Wrigley, which would become a separate subsidiary of the Mars company. At the end of that same year, Berkshire was one of the companies hardest hit by the subprime crisis; due to its exposure to banks and insurance companies.

On November 3, 2009, Buffett, through Berkshire Hathaway, completed the largest transaction in its history, buying the company for $44 billion million. Burlington Northern Santa Fe Railways (BNSF), of which it already owned 22.6%. The takeover bid was for 77% of the shares that he did not yet own. This $44 billion includes the $10 billion of debt Burlington Northern currently has and involves paying $100 per share, a 31% premium over the previous day's close.

Private life

Buffett's house.

In the biography The Snowball: Warren Buffett and the Business of Life, he is portrayed as an emotionally fragile man, with an often complicated relationship with women. The work speaks particularly of his relationship with his mother, whom Buffett acknowledged that she was capable of sinking him psychologically.

In 1952 Buffett married Susie Thompson. For a time he invested unsuccessfully in a Texaco service station and real estate and became a night professor at the University of Omaha. He took lessons with Dale Carnegie to overcome his tremendous shyness so he could speak in public.

Warren suffered greatly when he divorced his wife Susie in 1977. According to the biography, Buffett was in love with Susan and the divorce affected him greatly, to the point where he was living like a bum on her doorstep for weeks. to this, both professed great love until Susie's death in 2004, due to throat cancer. Buffett spent weeks without leaving her, and when she died, her most fragile part came out again and she did not have the strength to go to the funeral. Susie prepared the way for Warren after his death and asked her friend Astrid Menks to always take care of her. her husband. Menks would become Buffett's second wife on Susie's death.

On April 18, 2012, Warren Buffett announced that he had prostate cancer and would undergo a 22-day treatment.

Warren turned 92 this past August. Although he himself is now in good health in his numerous letters to investors, he has dealt with the issue of his succession in detail and it does not seem that it will be a great risk for his legacy to continue.