Becoming Berkshire

In this episode of Becoming Berkshire, we continue through 1971 with George Goodman’s Supermoney and the investing philosophy that shaped Warren Buffett.Benjamin Graham gave Buffett the foundation: margin of safety, Mr. Market, intrinsic value, and the discipline to avoid permanent loss of capital. But investments like American Express and Disney showed the first signs of Buffett’s evolution from buying cheap stocks to recognizing the value of great businesses.This episode explores Graham’s influence, Buffett’s partnership years, and the early bridge between cigar-butt investing and franchise value.

Welcome to 1971.The markets are reeling from one of the worst bear markets since the Great Depression. Speculation has collapsed, confidence is shaken, and the financial world is searching for answers.In this episode of Becoming Berkshire, we turn to an unlikely source: George Goodman, writing under the name Adam Smith, and his book Supermoney. Written in the depths of the 1969–72 bear market, Supermoney captured the unraveling of Wall Street’s excesses—and quietly documented the most extraordinary investment record of the era.At the time, almost no one was paying attention.Goodman asked a simple question in 1971: Who is Warren Buffett?Even seasoned financial journalists didn’t know the answer.From a modest office in Omaha, Buffett had compounded capital at an astonishing rate for over a decade—without publicity, without committees, and without participating in the speculative culture of the 1960s. While others chased concepts and technology, Buffett applied Benjamin Graham’s principles with absolute consistency and stepped away entirely at the height of his success.This episode explores why the world missed him, how distance from Wall Street became an advantage, and what Supermoney reveals about temperament, discipline, and time—the real foundations of compounding.

Episode 17 | 1970: Goodbody’s Fall, Walmart’s Rise, and Buffett’s First Float Play1970 opened with chaos on Wall Street. Broker-dealers were failing, the Fed was scrambling, and Goodbody & Co.—once a pillar of the brokerage world—collapsed in scandal before being rescued by Merrill Lynch. Meanwhile, in Bentonville, Arkansas, Sam Walton was taking Walmart public, setting the stage for one of the greatest retail stories ever told.At the same time, Warren Buffett, Charlie Munger, and Rick Guerin were quietly buying into Blue Chip Stamps, discovering the power of float—a concept that would define Berkshire Hathaway’s future. And inside Berkshire, the textile mill was fading, but insurance and banking were beginning to take root.This episode explores the contrasts of 1970: Wall Street’s crisis, Walmart’s rise, and the early blueprint of what Berkshire would become.

Episode 16Our podcast delves into 1970, a year of profound financial turmoil where the Dow Jones plummeted amidst recession fears and an "uneasy Republican administration". We'll uncover two critical events: the Penn Central Transportation Company's bankruptcy, which sent "shock waves through the commercial paper market" and required urgent Federal Reserve intervention to prevent a domino effect on Wall Street. Simultaneously, the near-collapse of Hayden, Stone & Co., a major securities firm plagued by "terrible" record-keeping and bad investments, threatened to freeze 90,000 customer accounts and bankrupt "perhaps another fifty firms," narrowly averted by last-minute efforts involving figures up to President Nixon. During this chaos, Warren Buffett strategically invested further in Berkshire Hathaway and Blue Chip Stamps as his partnership dissolved, navigating the challenging economic landscape.

Ep. 15

In 1969, Warren Buffett and Charlie Munger redirected their capital away from stripped-down sectors like textiles and retail—seeking businesses with resilience, reliable cash flow, and fulfillment of Berkshire’s long-term vision. That quest led them to the Illinois National Bank of Rockford, run by Eugene Abegg—a vivid character who carried large sums in cash, rented safe deposit boxes at cocktail parties, and even printed his own currency.This episode explores:The backstory behind the acquisition and purchase price dynamicsThe bank’s financial health: assets, equity, ROE, and ROAHow this marked a strategic pivot for Buffett—away from failing textiles and toward cash-generating, float-rich enterprises like banking and insuranceRead the full issue here: https://open.substack.com/pub/theweekendinvestor/p/becoming-berkshire-1969-part-2-illinois?r=21sroa&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

In 1969, Warren Buffett retired from managing money and dissolved his partnership, shifting his focus more towards Berkshire Hathaway. This decision occurred during a period of significant economic change marked by the onset of "stagflation" and sharp drawdowns for "high-flying go-go stocks", as Buffett found the investing environment increasingly "negative and frustrating" and struggled to find new opportunities that aligned with his investment style. Throughout his partnership, Buffett consistently followed fundamentalist investment principles, focusing on basic value, a margin of safety, and avoiding "glamour stocks" or "concept companies," a disciplined approach that contrasted sharply with the speculative market of the late 1960s.https://open.substack.com/pub/theweekendinvestor/p/becoming-berkshire-1969-part-1-buffett?r=21sroa&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

1968 was a year of profound upheaval for the United States and Wall Street, marked by assassinations, widespread social unrest, and a "back-office crisis" that overwhelmed manual trading systems. Amidst this national and financial turmoil, Warren Buffett's disciplined partnership delivered an impressive 45% return, significantly outperforming the modest gains of the Dow Jones. This strategic steadfastness was exemplified by Berkshire Hathaway's acquisition of Sun Newspaper and Blacker Printing Company, showcasing Buffett's ability to thrive when the world seemed to be crumbling.

Welcome to episode 11, where we delve into the transformative 1967 acquisition of National Indemnity (NICO) by Berkshire Hathaway for $8.6 million. This pivotal move marked Berkshire's strategic shift from its struggling textile operations, which Warren Buffett was actively shrinking due to mounting costs and competition. The acquisition was fundamentally driven by the significant "float" NICO provided, offering Berkshire valuable, deployable capital and laying the groundwork for its future as a powerful insurance conglomerate.https://open.substack.com/pub/theweekendinvestor/p/becoming-berkshire-1967-national?r=21sroa&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

Welcome to Becoming Berkshire Episode 10! Today, we're delving into the pivotal year of 1967 for Berkshire Hathaway, a period that marked its transformation into the diversified powerhouse it is today.In 1967, Warren Buffett faced significant challenges in deploying capital. The market environment was changing, with a new generation of money managers emerging, many of whom were far removed from the traumatic experiences of the 1929 Depression. This era saw the rise of figures like Gerald Tsai Jr., known for momentum investing and rapid portfolio turnover, and Fred Carr, a "gunslinger" who preached, "We fall in love with nothing. Every morning, everything is for sale".Buffett found himself increasingly "out of step with present conditions". He noted a sharp diminution in obvious quantitatively based investment bargains and a "hyper-reactive pattern of market behavior" due to a "mushrooming interest in investment performance". His analytical techniques had limited value against this backdrop, and he was skeptical of what he called "fashion" investing, refusing to invest based on anticipating market action rather than business valuations. Furthermore, his capital base had grown to approximately $65 million, making it harder to find suitable investment ideas, and his personal interests dictated a less compulsive approach.It was amidst these challenges that Buffett initiated a profound shift. He began allocating capital outside of the textile business, a decision that would forever change Berkshire's trajectory. The seminal event of 1967 was the acquisition of National Indemnity Company. This strategic purchase was "perhaps the most important event in Berkshire’s history," as it provided a strong platform for future growth and an immediate outlet for the cash freed up from Berkshire’s textile operations.Join us as we explore how these market dynamics, Buffett's changing approach, and this crucial acquisition laid the foundation for Berkshire Hathaway's enduring legacy.https://open.substack.com/pub/theweekendinvestor/p/becoming-berkshire1967-buffett-and?r=21sroa&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

Welcome to Episode 9 of Becoming Berkshire! As we continue our journey through 1966, a pivotal year for Warren Buffett and Berkshire Hathaway, we're diving deep into one of his most fascinating early investments: his acquisition of 5% of The Walt Disney Company. This period also saw Berkshire Hathaway pay its only dividend of 10 cents per share, signaling Buffett's active exploration of new capital allocation avenues. You'll discover how Buffett's curiosity was piqued by Mary Poppins' theatrical success, leading him to ponder Disney's "Moat" and conduct unconventional due diligence, broadening his definition of "intrinsic value" to include Disney's "off the books" film library.

The year 1966 was marked by a fluctuating stock market, with the Dow Jones Industrial Average briefly breaching the 1,000 mark for the first time before closing significantly lower, while the Buffett Limited Partnership achieved a 20.4% return, outperforming the Dow. During this period, Warren Buffett took control of Berkshire Hathaway and, for the first time, partnered with Charlie Munger on a business venture to acquire the Hochschild, Kohn & Co. department store, an investment that would later be considered a mistake. https://open.substack.com/pub/theweekendinvestor/p/becoming-berkshire-1966-hochschild?r=21sroa&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

Episode 7 details Warren Buffett's 1965 hostile takeover of Berkshire Hathaway after a tender offer dispute, resulting in his control, chairmanship, and Ken Chace's appointment as president.https://open.substack.com/pub/theweekendinvestor/p/becoming-berkshire-1965-hostile-takeover?r=21sroa&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

https://open.substack.com/pub/theweekendinvestor/p/becoming-berkshire-1964-buffetts?r=21sroa&utm_campaign=post&utm_medium=web&showWelcomeOnShare=falseIn 1964, Warren Buffett continued to build his partnership (Buffett Partnership Limited or "BPL"), focusing on investment strategies that included "Generals," "Workouts," and "Controls," while criticizing institutional management for groupthink and advocating for independent, data-driven decisions. Crucially, Buffett's "monumentally stupid decision" not to tender his Berkshire Hathaway shares at $11.375 due to a personal slight over a $0.125 price difference led him to aggressively acquire more shares of the struggling textile manufacturer, eventually resulting in his control of the company.

Welcome to Episode 5 of Becoming Berkshire, as we look at the fascinating story of the American Express salad oil scandal, which almost brought down the New York Stock Exchange (NYSE). We also get to witness the beginning of Buffett’s investment ideology evolving as he starts to be influenced by Charlie Munger.https://open.substack.com/pub/theweekendinvestor/p/becoming-berkshire-196364-the-american?r=21sroa&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

Explore the world of Warren Buffett's investment strategies in 1963, a year marked by significant historical events. This discussion delves into insights from Buffett's BPL letter, highlighting the extraordinary power of compounding through a compelling example. Discover his framework for identifying investment opportunities, categorized into three main approaches: 1. Generals: This approach focuses on undervalued stocks purchased at bargain prices.2. Workouts: This strategy capitalizes on predictable outcomes from corporate activities such as mergers.3. Controls: This involves acquiring a significant percentage of a company's stock.We also examine Buffett's early involvement with Berkshire Hathaway in 1963, detailing how his purchases transitioned from a 'General' security to a 'Control' position. Finally, we look at how Berkshire navigated challenges and strengthened its balance sheet during this period.https://open.substack.com/pub/theweekendinvestor/p/becoming-berkshire-1963?r=21sroa&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false#warrenbuffett #business #berkshirehathaway #investing #stockmarket #sharemarket #money #buffett #valueinvesting #history

In 1962, Warren Buffett was still investing like a student of Ben Graham, buying cheap, unloved stocks with one last puff left in them.That year, he took control of Dempster Mill, watched Harry Bottle turn a struggling business into a source of cash, and began buying shares of a dying New England textile company called Berkshire Hathaway.At the time, Berkshire was just another cigar butt. It was statistically cheap, trading far below book value, but it was also a poor business in a declining industry.Buffett thought he was buying one more bargain.Instead, he accidentally began one of the greatest compounding stories in modern financial history.This episode covers Buffett Partnership, Dempster Mill, the Kennedy Slide, Berkshire Hathaway’s textile roots, and the mistake that became an empire. 

In Issue 2 of Becoming Berkshire, Warren Buffett heads from college life at the University of Pennsylvania to Nebraska, nearly takes a full-time job at JCPenney, gets rejected by Harvard, and then finds the teacher who changes everything: Benjamin Graham.This episode covers Buffett’s years from 1947 to 1951, his arrival at Columbia, the lessons he learned from Graham, and the three core ideas that became the foundation of his investing life: owning pieces of businesses, using a margin of safety, and treating Mr. Market as your servant, not your master.

Before Warren Buffett became the Oracle of Omaha, he was a numbers-obsessed kid selling gum, Coca-Cola, golf balls, newspapers, and pinball machines while dreaming of a life without a boss. This episode follows Buffett from his Great Depression childhood to his first stock purchase, his early businesses, and the lessons that shaped the investor he would become.