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Billionaire CEO & Entrepreneur

Warren Buffet

Warren Buffett is an American business magnate, investor, and philanthropist, who is the chairman and CEO of Berkshire Hathaway.

He is considered one of the most successful investors in the world and has a net worth of US$88.9 billion as of December 2019, making him the fourth-wealthiest person in the world.

  • Full name: Warren Edward Buffett
  • Profession: American businessman, investor
  • Born: 30 August 1930 (age 89 years), Omaha, Nebraska, United States
  • Net worth: 74.3 billion USD (2020)
  • Spouse: Astrid Menks (m. 2006), Susan Buffett (m. 1952–2004)
  • Education: Columbia Business School (1950–1951)
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About Warren Buffet

Buffett was born on 30 August 1930 in Omaha, Nebraska, United States. He is the second of three children and the only son of Leila (née Stahl) and Congressman Howard Buffett.

Buffett began his education at Rose Hill Elementary School. In 1942, his father was elected to the first of four terms in the United States Congress, and after moving with his family to Washington, D.C., Warren finished elementary school, attended Alice Deal Junior High School and graduated from Woodrow Wilson High School in 1947, where his senior yearbook picture reads: “likes math; a future stockbroker.”

After finishing high school and finding success with his side entrepreneurial and investment ventures, Buffett wanted to skip college to go directly into business but was overruled by his father.

Buffett displayed an interest in business and investing at a young age. He was inspired by a book he borrowed from the Omaha public library at the age of seven, One Thousand Ways to Make $1000.

Much of Buffett’s early childhood years were enlivened with entrepreneurial ventures. In one of his first business ventures, Buffett sold chewing gum, Coca-Cola bottles, and weekly magazines door to door.

He worked in his grandfather’s grocery store. While still in high school, he made money delivering newspapers, selling golf balls and stamps, and detailing cars, among other means. On his first income tax return in 1944, Buffett took a $35 deduction for the use of his bicycle and watch on his paper route.

In 1945, as a high school sophomore, Buffett and a friend spent $25 to purchase a used pinball machine, which they placed in the local barber shop.

Within months, they owned several machines in three different barber shops across Omaha. The business was sold later in the year for $1,200 to a war veteran.

Buffett’s interest in the stock market and investing dated to schoolboy days he spent in the customers’ lounge of a regional stock brokerage near his father’s own brokerage office.

On a trip to New York City at age ten, he made a point to visit the New York Stock Exchange. At 11, he bought three shares of Cities Service Preferred for himself, and three for his philanthropic sister Doris Buffett.

At the age of 15, Warren made more than $175 monthly delivering Washington Post newspapers. In high school, he invested in a business owned by his father and bought a 40-acre farm worked by a tenant farmer.

He bought the land when he was 14 years old with $1,200 of his savings. By the time he finished college, Buffett had accumulated $9,800 in savings (about $105,000 today).

In 1947, Buffett entered the Wharton School of the University of Pennsylvania. He would have preferred to focus on his business ventures, but his father pressured him to enrol

Warren studied there for two years and joined the Alpha Sigma Phi fraternity. He then transferred to the University of Nebraska where at 19, he graduated with a Bachelor of Science in Business Administration.

After being rejected by Harvard Business School, Buffett enrolled at Columbia Business School of Columbia University upon learning that Benjamin Graham taught there.

He earned a Master of Science in Economics from Columbia in 1951. After graduating, Buffett attended the New York Institute of Finance.

The basic ideas of investing are to look at stocks as business, use the market’s fluctuations to your advantage, and seek a margin of safety. That’s what Ben Graham taught us. A hundred years from now they will still be the cornerstones of investing.

— Warren Buffett

Career

Buffett worked from 1951 to 1954 at Buffett-Falk & Co. as an investment salesman; from 1954 to 1956 at Graham-Newman Corp. as a securities analyst; from 1956 to 1969 at Buffett Partnership, Ltd. as a general partner; and from 1970 as Chairman and CEO of Berkshire Hathaway Inc.

In April 1952, Buffett discovered that Graham was on the board of GEICO insurance. Taking a train to Washington, D.C. on a Saturday, he knocked on the door of GEICO’s headquarters until a janitor admitted him.

There he met Lorimer Davidson, GEICO’s Vice President, and the two discussed the insurance business for hours.

Davidson would eventually become Buffett’s lifelong friend and a lasting influence, and would later recall that he found Buffett to be an “extraordinary man” after only fifteen minutes.

Buffett wanted to work on Wall Street but both his father and Ben Graham urged him not to. He offered to work for Graham for free, but Graham refused.

Buffett returned to Omaha and worked as a stockbroker while taking a Dale Carnegie public speaking course.

Using what he learned, he felt confident enough to teach an “Investment Principles” night class at the University of Nebraska-Omaha.

The average age of his students was more than twice his own. During this time he also purchased a Sinclair Texaco gas station as a side investment but it was unsuccessful.

In 1952, Buffett married Susan Thompson at Dundee Presbyterian Church. The next year they had their first child, Susan Alice.

In 1954, Buffett accepted a job at Benjamin Graham’s partnership. His starting salary was $12,000 a year (about $114,000 today).

There he worked closely with Walter Schloss. Graham was a tough boss. He was adamant that stocks provide a wide margin of safety after weighing the trade-off between their price and their intrinsic value. That same year the Buffets had their second child, Howard Graham.

In 1956, Benjamin Graham retired and closed his partnership. At this time Buffett’s personal savings were over $174,000 (about $1.64 million today) and he started Buffett Partnership Ltd.

In 1957, Buffett operated three partnerships. He purchased a five-bedroom stucco house in Omaha, where he still lives, for $31,500.

In 1958 the Buffetts’ third child, Peter Andrew, was born. Buffett operated five partnerships that year. In 1959, the company grew to six partnerships and Buffett met future partner Charlie Munger.

By 1960, Buffett operated seven partnerships. He asked one of his partners, a doctor, to find ten other doctors willing to invest $10,000 each in his partnership. Eventually, eleven agreed, and Buffett pooled their money with a mere $100 original investment of his own.

In 1961, Buffett revealed that 35% of the partnership’s assets were invested in the Sanborn Map Company.

He explained that Sanborn stock sold for only $45 per share in 1958, but the company’s investment portfolio was worth $65 per share.

This meant that Sanborn’s map business was being valued at “minus $20.” Buffett eventually purchased 23% of the company’s outstanding shares as an activist investor, obtaining a seat for himself on the Board of Directors, and allied with other dissatisfied shareholders to control 44% of the shares.

To avoid a proxy fight, the Board offered to repurchase shares at fair value, paying with a portion of its investment portfolio. 77% of the outstanding shares were turned in. Buffett had obtained a 50% return on investment in just two years.

Summary

Buffett has been the chairman and largest shareholder of Berkshire Hathaway since 1970. He has been referred to as the “Oracle” or “Sage” of Omaha by global media outlets.

He is noted for his adherence to value investing and for his personal frugality despite his immense wealth.

Research published at the University of Oxford characterizes Buffett’s investment methodology as falling within “founder centrism” – defined by a deference to managers with a founder’s mindset, an ethical disposition towards the shareholder collective, and an intense focus on exponential value creation.

Essentially, Buffett’s concentrated investments shelter managers from the short-term pressures of the market.

Buffett is a notable philanthropist, having pledged to give away 99 percent of his fortune to philanthropic causes, primarily via the Bill & Melinda Gates Foundation.

He founded The Giving Pledge in 2009 with Bill Gates, whereby billionaires pledge to give away at least half of their fortunes.