Buffett
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21. Bruck, The Predators’ Ball, 237.
22. Louis Lowenstein, the author’s father, was the moderator.
23. George Anders, Merchants of Debt (New York: Basic Books, 1992), 113.
24. Transcript of seminar; Knights, Raiders, and Targets, 11–27.
25. Greenwald, “High Times for T. Boone.”
26. Warren Buffett, 1986 Capital Cities/ABC management conference.
27. Bauer, “Convictions.” See also Berkshire Hathaway Inc., 1985 Annual Report, 20.
28. Dennis Kneale, “Duo at Capital Cities Scores a Hit, but Can Network Be Part of It?” Wall Street Journal, February 2, 1990.
29. Ibid.
30. Medley, “Pilgrimage.”
31. Bauer, “Convictions.”
32. Charlie Munger.
33. Bianco, “Why Buffett Is Breaking His Rules.”
34. Berkshire Hathaway Inc., 1989 Annual Report, 7.
35. Bianco, “Why Buffett Is Breaking His Rules”; Berkshire Hathaway Inc., 1987 Annual Report, 15.
36. Buffett, talk at Columbia, 1993.
37. Debt is defined as term debt plus short-term borrowings, exclusive of other liabilities. Berkshire’s insurance unit makes a precise comparison somewhat fudgy, but the basic point holds.
38. Warren Buffett, 1986 Capital Cities/ABC management conference.
39. Warren Buffett, 1988 Capital Cities/ABC management conference.
40. Knights, Raiders, and Targets, 26.
41. Warren Buffett, 1988 Capital Cities/ABC management conference.
Chapter 15. PUBLIC AND PRIVATE
1. Robert Dorr, “Early Faith Made Many ‘Buffett Millionaires,’ ” Omaha World-Herald, May 4, 1986.
2. William Baldwin and Jean A. Briggs, “We Love You, Ben Graham, but It’s Time to Take a Vacation,” Forbes, June 3, 1985.
3. Marsha Strang.
4. Jason Zweig, “Faces Behind the Figures,” Forbes, September 4, 1989.
5. Robert Dorr, “Buffett Hears from Large, Small in His Search for New Businesses,” Omaha World-Herald, December 3, 1986.
6. Robert Dorr, “Investor Warren Buffett Views Making Money as ‘Big Game,’ ” Omaha World-Herald, March 24, 1985.
7. Terry Hyland, “Lincolnite Cohen Ordered to Trial in Extortion Case,” Omaha World-Herald, February 18, 1987.
8. Robert Spass.
9. Davis, “Buffett Takes Stock.”
10. Ronald Gutman.
11. Smith, Supermoney, 179.
12. Bernice Kanner, “Aw, Shucks, It’s Warren Buffett,” New York, April 22, 1985; “Corn-fed Capitalist” (Regardie’s); and Smith, “Warren Buffett: Corn-fed Capitalist” (Fort Worth Star-Telegram).
13. Grant, “$4-Billion Regular Guy.”
14. “Corn-fed Capitalist.”
15. Davis, “Buffett Takes Stock”; Bauer, “Convictions”; Grant, “$4-Billion Regular Guy.”
16. Kanner, “Aw, Shucks”; Laing, “The Collector”; “Corn-fed Capitalist.” Harvard was often omitted from the story until Carol Loomis’s probing interview in 1988 (“Inside Story”).
17. Davis, “Buffett Takes Stock”; Dorr, “Buffett Plans to Shut Down Finance Firm.”
18. “Buffetts in New Home,” Omaha World-Herald, May 23, 1956.
19. Goldenson, Beating the Odds, 465.
20. Kanner, “Aw, Shucks.”
21. Donald Keough.
22. Robert Spass [Salomon Brothers banker].
23. Berkshire Hathaway, 1986 Annual Report, 21.
24. Warren Buffett, 1986 Capital Cities/ABC management conference.
25. Stan Lipsey; Charles Munger.
26. William Angle. The figure includes his wife’s stock.
27. Richard Rainwater.
28. Warren Buffett, 1990 Capital Cities/ABC management conference.
29. Steven Gluckstern.
30. Walter Schloss.
31. Roxanne Brandt.
32. Tom Knapp.
33. Louis Lowenstein.
34. Tim Medley, “Medley on Money,” Mississippi Business Journal, July 1989.
35. Doris Buffett Bryant.
36. Robert Dorr, “Buffetts Fund Efforts for Population Control,” Omaha World-Herald, January 10, 1988.
37. Berkshire Hathaway Inc., 1989 Annual Report, 22.
38. Berkshire Hathaway Inc., 1982 Annual Report, 14.
39. William Snyder.
40. Charlie Munger; Loomis, “Inside Story.”
41. Berkshire Hathaway Inc., 1986 Annual Report, 21.
42. Thomas Winship.
43. Warren Buffett, talk at Columbia, 1993.
44. Warren Buffett, 1993 annual meeting of Berkshire Hathaway.
45. Warren Buffett, 1987 annual meeting of Berkshire Hathaway.
46. Berkshire Hathaway Inc., 1990 Annual Report, 27.
47. Ralph Schey.
48. Donald Yale.
49. SEC File No. HO-784, Blue Chip Stamps, et al./Warren Buffett, letter to George Aderton, January 14, 1975.
50. Berkshire Hathaway Inc., 1989 Annual Report, 8.
Chapter 16. CRASH
1. Tom Knapp.
2. Quentin Breunig.
3. Berkshire Hathaway Inc., 1984 Annual Report, 10–12.
4. Steven Atkins.
5. Michael Goldberg.
6. Berkshire Hathaway Inc., 1980 Annual Report, 10.
7. Berkshire Hathaway Inc., 1982 Annual Report, 9.
8. Jack Byrne.
9. Berkshire Hathaway Inc., 1985 Annual Report, 15.
10. A.M. Best Co.
11. Berkshire Hathaway Inc., 1985 Annual Report, 16.
12. Ibid, 16.
13. The 1986 total includes $233 million from a new contract under which Berkshire took 7 percent of the business written by Fireman’s Fund. Excluding Fireman’s, premiums were up sixfold.
14. “What Buffett Isn’t Buying Now,” Fortune, April 27, 1987.
15. John Constable, annual meeting notes.
16. Tim Medley, summer 1987 newsletter to clients.
17. Michael Zimmerman.
18. Laurie P. Cohen and Steve Swartz, “Salomon Buys Holder’s Stake for $809 Million,” Wall Street Journal, September 28, 1987; James Sterngold, “Too Far, Too Fast, Salomon Brothers’ John Gutfreund,” New York Times Magazine, January 10, 1988.
19. Coproduction of Channel 13 in New York and the Columbia University Seminar on Media and Society. The program was taped early in 1987 and aired on Channel 13, October 31, 1987.
20. Ronald Perelman; Felix Rohatyn; Sterngold, “Too Far, Too Fast”; Anthony Bianco, “Salomon and Revlon: What Really Happened—How Perelman Drove Gutfreund into Buffett’s Arms,” Business Week, October 12, 1987.
21. Gedale Horowitz; Gerald Rosenfeld.
22. Jay Higgins; Gedale Horowitz; Martin Leibowtiz; William McIntosh; Gerald Rosenfeld.
23. Lisa Belkin, “Gillette Deal Ends Revlon Bid,” New York Times, November 25, 1986.
24. Gerald Rosenfeld.
25. Berkshire Hathaway Inc., 1987 Annual Report, 19.
26. William McIntosh.
27. Ronald Perelman; Sterngold, “Too Far, Too Fast.”
28. Ronald Perelman; Felix Rohatyn; Laurie P. Cohen, “Revlon Offers to Buy Interest in Salomon Inc.,” Wall Street Journal, September 29, 1987.
29. Gedale Horowitz; Sterngold, “Too Far, Too Fast.”
30. Huey Lowenstein [no relation to author]; Jay Higgins.
31. Steve Swartz, “Home to Roost: Raid on Salomon Inc. Has Turned the Tables on Wall Street Firms,” Wall Street Journal, October 2, 1987.
32. Berkshire Hathaway Inc., 1987 Annual Report, 19.
33. Allan Sloan, “What Color Is Your Mail?” Forbes, October 19, 1987.
34. Warren Buffett, “How to Tame the Casino Society,” Washington Post, December 4, 1986.
35. Carol J. Loomis, “The Wisdom of Salomon?” Fortune, April 11, 1988 (sidebar to Loomis, “Inside Story”).
36. “The Money Manager,” Wall Street Transcript, June 29, 1987.
> 37. Jeffrey M. Laderman, “Why the Bull Is Such a Long-Distance Runner,” Business Week, August 24, 1987.
38. Berkshire Hathaway Inc., 1987 Annual Report, 17.
39. Julie Rohrer, “Timing from the Top,” Institutional Investor, February 1987.
40. Henny Sender, “Turmoil in the Trading Room,” Institutional Investor, September 1987.
41. “The Money Manager,” Wall Street Transcript, February 23, 1987.
42. Report of the Presidential Task Force on Market Mechanisms, January 1988, p. 29 [the “Brady report”].
43. “The Money Manager,” Wall Street Transcript, April 13, 1987.
44. Byron R. Wien, “Investment Strategy,” Morgan Stanley research report, August 11, 1987.
45. Peter T. Kilborn, “U.S. Aides Calm, but Worried,” New York Times, October 17, 1987.
46. Tim Metz, Alan Murray, Thomas E. Ricks, and Beatrice E. Garcia, “Stocks Plunge 508 Amid Panicky Selling,” Wall Street Journal, October 20, 1987.
47. Brady report; Scott McMurray and Robert L. Rose, “Chicago’s ‘Shadow Markets’ Led Free Fall in a Plunge That Began Right at Opening,” Wall Street Journal, October 20, 1987.
48. Alison Leigh Cowan, “Day to Remember in Financial District,” New York Times, October 20, 1987.
Chapter 17. A BRIEF INTRODUCTION TO DARTS
1. Berkshire Hathaway Inc., 1987 Annual Report, 14.
2. James H. Lorie and Mary T. Hamilton, The Stock Market: Theories and Evidence (Homewood, Ill.: Richard D. Irwin, 1973), 100.
3. Peter L. Bernstein, Capital Ideas: The Improbable Origins of Modem Wall Street (New York: Free Press, 1992), 115, 118–19.
4. Paul A. Samuelson, “Proof That Properly Anticipated Prices Fluctuate Randomly,” MIT Industrial Management Review, Spring 1965, pp. 782–85.
5. Paul A. Samuelson, memorandum with testimony on mutual funds, U.S. Senate, Committee on Banking and Currency, August 2, 1967.
6. Thorson, “Omahan in Search.”
7. Paul A. Samuelson.
8. Bernstein, Capital Ideas, 117.
9. Eugene F. Fama, “Random Walks in Stock Market Prices,” Financial Analysts Journal, September-October 1965.
10. Ibid.
11. “The Stock-picking Fallacy,” Economist, August 8, 1992.
12. Paul A. Samuelson, foreword to Marshall E. Blume and Jeremy J. Siegel, “The Theory of Security Pricing and Market Structure,” Journal of Financial Markets, Institutions and Instruments, Vol. 1, No. 3, 1992, pp. 1–2.
13. Warren Buffett, private correspondence.
14. Armen A. Alchian, letter to Tibor Fabian, June 29, 1992.
15. Paul A. Samuelson.
16. Michael C. Jensen, “Random Walks: Reality or Myth—Comment,” Financial Analysts Journal, November-December 1967, p. 7.
17. Berkshire Hathaway Inc., 1988 Annual Report, 18.
18. “A Conversation with Benjamin Graham,” Financial Analysts Journal, September-October 1976.
19. Kahn and Milne, Benjamin Graham, 38.
20. Berkshire Hathaway Inc., 1988 Annual Report, 18.
21. Richard A. Brealey and Stewart C. Myers, Principles of Corporate Finance, 2nd ed. (New York: McGraw-Hill, 1984), 266, 272.
22. Ibid, 273.
23. Tony Thomson, letter to Louis Lowenstein, March 3, 1993.
24. Malkiel, Random Walk, 185.
25. Ibid., 98, 175.
26. Berkshire Hathaway Inc., 1988 Annual Report, 18.
27. E.g., see Malkiel, Random Walk, 231–41.
28. Graham, Intelligent Investor, 60.
29. Recording of 1984 Graham and Dodd seminar; and Warren Buffett, “The Superinvestors of Graham-and-Doddsville,” Hermes [Columbia Business School], Fall 1984.
30. Michael C. Jensen, “Some Anomalous Evidence Regarding Market Efficiency,” Journal of Financial Economics 6 (1978), p. 95.
31. Ibid, 96.
32. 1984 Graham and Dodd seminar.
33. 1984 Graham and Dodd seminar; Buffett, “Superinvestors.”
34. Bruce Greenwald.
35. Laurie Meisler, “Can Analysts Learn to Love MPT?” Institutional Investor, February 1979.
36. Reprinted in Fortune, December 7, 1987.
37. Burton G. Malkiel, “Why Markets Are Working Better,” Wall Street Journal, August 22, 1986.
38. Buffett, “How to Tame the Casino Society.”
39. Burton G. Malkiel, “But Markets Only Seem More Volatile,” New York Times, September 27, 1987.
40. Brady report, vi.
41. Berkshire Hathaway Inc., 1987 Annual Report, 17.
42. Robert J. Shiller, “Investor Behavior in the October 1987 Stock Market Crash: Survey Evidence,” Working Paper 2446 (New Haven: Cowles Foundation, November 1987), pp. 11–12.
43. Eric N. Berg, “A Study Shakes Confidence in the Volatile-Stock Theory,” New York Times, February 18, 1992.
44. “Beating the Market: Yes It Can Be Done,” Economist, December 5, 1992.
45. Richard A. Brealey and Stewart C. Myers, Principles of Corporate Finance, 4th ed. (New York: McGraw-Hill, 1991), 297–300, 310.
46. Berkshire Hathaway Inc., 1988 Annual Report, 18.
47. Ibid.
Chapter 18. SECRETS OF THE TEMPLE
1. Donald Keough.
2. Michael J. McCarthy, “Coke Stake of 6.3%, 2nd Biggest Held in Soft-Drink Giant, Bought by Buffett,” Wall Street Journal, March 16, 1989.
3. Michael J. McCarthy, “Heard on the Street: Buffett’s Thirst for Coke Splits Analysts’ Ranks,” Wall Street Journal, March 3, 1989.
4. Ibid.
5. Eben Shapiro, “Coke vs. Pepsi as an Investment,” New York Times, October 23, 1991.
6. Roger Cohen, “For Coke, World Is Its Oyster,” New York Times, November 21, 1991.
7. Warren Buffett, talk at Columbia, 1993.
8. Berkshire Hathaway Inc., 1986 Annual Report, 24
9. Smith, “Reluctant Billionaire.”
10. E.J. Kahn, Jr., “The Universal Drink,” New Yorker, February 14, 1959, pp. 47, 66.
11. Ibid, 37, 38, 50, 52.
12. Berkshire Hathaway Inc., 1989 Annual Report, 15.
13. Cohen, “For Coke, World Is Its Oyster.”
14. Mark Pendergrast, For God, Country and Coca-Cola: The Unauthorized History of the Great American Soft Drink and the Company That Makes It (New York: Scribner’s, 1993), 241–44.
15. John Huey, “The World’s Best Brand,” Fortune, May 31, 1993.
16. Buffett, talk at Columbia, 1993.
17. Coca-Cola Co., 1982 Annual Report, 2.
18. Buffett, talk at Columbia, 1993.
19. Pendergrast, For God, Country and Coca-Cola, 343.
20. Donald Keough.
21. Buffett, talk at Columbia, 1993.
22. “The Coca-Cola Industry,” Fortune, December 1938. Buffett quoted the Fortune piece in the Berkshire Hathaway Inc. 1993 Annual Report, p. 14.
23. Ibid. Fortune was quoting William Allen White.
24. Huey, “World’s Best Brand.”
25. Emanuel Goldman, “The Coca-Cola Company,” PaineWebber research report, January 16, 1989.
26. Pendergrast, For God, Country and Coca-Cola, 375.
27. Berkshire Hathaway Inc., 1989 Annual Report, 15.
28. Huey, “World’s Best Brand.”
29. Buffett, talk at Columbia, 1993.
30. Ibid.
31. Lawrence Adelman, “Coca-Cola,” Dean Witter research report, February 6, 1989 [italics added].
32. Roy D. Burry, “The Coca-Cola Company,” Kidder Peabody research report, July 25, 1988 [italics added].
33. Beverage Roundtable, Wall Street Transcript, December 26, 1988.
34. Ron Gutman.
35. Huey, “World’s Best Brand.”
36. Donald Keough.
37. Ron Gutman.
38. Art Rowsell.
39. Berkshire Hathaway Inc., 1987 Annual Report, 18.
40. Buffett, “Superinvestors.”
41. Ca
roline E. Mayer, “Doris Buffett Said to Invest at Failed Firm,” Washington Post, October 28, 1987.
42. Denis Bovin; Ken Chace; Mike Goldberg; Ron Gutman; Art Rowsell; Alan Spoon; Marshall Weinberg.
43. “Corn-fed Capitalist.”
44. 1992 annual meeting of Berkshire Hathaway.
45. Lifestyles of the Rich and Famous [television program], October 25, 1992; Buffett, talk at Columbia, 1993.
46. Berkshire Hathaway Inc., 1987 Annual Report, 14; Buffett, talk at Columbia, 1993.
47. Edith Kenner; John Otto.
Chapter 19. HOWIE BUFFETT’S CORN
1. Warren Buffett, “Kiewit Legacy As Unusual as His Life,” Omaha World-Herald, January 20, 1980.
2. Richard I. Kirkland, Jr., “Should You Leave It All to the Children?” Fortune, September 29, 1986.
3. Susan Buffett Greenberg.
4. Susan Buffett Greenberg; Kay Graham.
5. Ann Landers.
6. Susan Buffett Greenberg.
7. Ibid.
8. Peter Buffett.
9. Howard Buffett.
10. Ibid.
11. Joe Rosenfield.
12. Tom Rogers.
13. Joe Rosenfield.
14. Susan Buffett Greenberg.
15. Robin Wood.
16. Kay Graham.
17. Larry Tisch. In 1988, Buffett told Adam Smith (“Reluctant Billionaire”) that “99 percent plus” of his money eventually would go to society. In 1991, by which time Buffett’s fortune was considerably larger, he told Linda Grant (“$4-Billion Regular Guy”) that his kids would get “substantially less” than half of 1 percent of his estate.
18. Robert Lenzner, “Warren Buffett’s Idea of Heaven: ‘I Don’t Have to Work with People I Don’t Like,’ ” Forbes, October 18, 1993.
19. Bauer, “Convictions.”
20. Internal Revenue Service; Buffett Foundation report for year ending June 1980. Net worth calculated as of December 31, 1979.
21. His private wealth was, indeed, private, but the visible tip of the iceberg was sizable. Buffett netted $16 million in cash and stock from the sale of the Rockford Bank in 1985. In 1987, he disclosed a 5.1 percent stake in ServiceMaster Limited Partnership, worth about $40 million. Also at about that time, he told a friend that he had $50 million in liquid securities.
22. Geoffrey Cowan.
23. Richard Holland; Joe Rosenfield.
24. William Wenke. In 1989, Buffett did give Nebraska $10, 000.