Two of Warren Buffett’s earlier letters to Berkshire Hathaway shareholders are now available online (in PDF). You can now find the 1973 and 1976 letters here.
The Berkshire Hathaway site only archives letters going back to 1977.
Note especially page four of the 1976 letter where a table of Berkshire Hathaway’s equity holdings is provided. Below, I’ve reformatted the table to show each position as a percentage of Berkshire’s equity portfolio at cost:
GEICO Convertible Preferred – 25.75%
Washington Post – 14.10%
Kaiser Industries – 10.97%
Interpublic Group – 6.01%
GEICO Common – 5.46%
California Water Service – 4.79%
Munsingwear – 4.51%
Ogilvy & Mather – 3.66%
National Presto – 2.24%
Other – 22.51%
To understand the rationale for each investment, you need to go back in time to look at the businesses as they really were in the 1970s and the prices they traded at when Buffett bought them.
A search through (online) newspaper archives is always a fruitful experience when researching Buffett / Berkshire. For instance, Buffett explains the logic behind his purchase of Kaiser Industries in the 1976 annual letter to shareholders. If you look through newspaper articles from 1976 – 1977 you will find several that fully explain the situation Kaiser found itself in, the large discount the holding company had traded at, and the manner in which the voluntary liquidation (“breakup”) was effected. You’ll also get an excellent feel for the way Buffett saw the situation. Remember, he reads a lot of newspapers.
By the way, there were a couple good contemporary articles on the GEICO debacle and that company’s subsequent resurrection. If I remember correctly, the best article (from an investor’s perspective) appeared in The New York Times.
It’s also fun to read several articles in succession and see how quickly analyst opinions changed on the company – though to be fair, there were some serious unanswered questions throughout much of that period both concerning GEICO’s capitalization and the full extent of its poor underwriting policies.
Buffett was quoted in a few of the GEICO articles, but he was rather tight-lipped except to say at some price he’d be willing to buy a whole lot of GEICO; at another price he’d be unwilling to buy any of it. Thirty years later, he still sounds much the same whenever he discusses a potential investment.
I highly recommend reading both letters – especially if you’ve already read all of the annual letters archived at Berkshire Hathaway’s own site.
Max Olson, who has written several excellent articles for this site – including Warren Buffett and the Washington Post – recently started his own blog. His latest post is entitled “PetroChina: A Look Back“. Max has carved out a niche for himself writing articles that “reverse engineer” great investment decisions. His PetroChina post is well worth reading.Read more