I cracked Warren Buffett's "secret code"
Published: Thu, 02/27/14
successful in the areas I would also like to be successful in.
When I lived in the Omaha area, I naturally wanted to know more
about the "hometown hero" super-investor Warren Buffett.
So, I started buying books on Buffett.
One of them was "The Making of an American Capitalist" by
Roger Lowenstein. It's not only the best book on Buffett,
it's probably the best business book that I've ever read.
Take a look here (greedy capitalist caution - if you buy the book
by following this link I will make a dime or so!):
http://www.amazon.com/gp/product/B00DPTL2F0/ref=as_li_ss_tl?ie=UTF8&camp=1789&creative=390957&creativeASIN=B00DPTL2F0&linkCode=as2&tag=audigold-20
I tried to "derive" how he became such a great investor.
Along the way, I learned about Buffett's sidekick, Charlie
Munger, who was one of the only people that Buffett let into his
"investing think tank" early on.
Munger was also originally from Omaha, but started his legal career
out west in the Pasadena area.
Charlie Munger is like a modern day Benjamin Franklin, and I've
added him to my short "business heroes" list.
I've spent many a day and night learning about these two titans
of business. My study of them has continued up to the present day.
My father-in-law treated me to an annual meeting of Berkshire
Hathaway last year -- great experience.
After searching for the "secret code" to make me more
like Buffett, I finally figured it out.
It ended up being quite boring.
Simple in principle, but difficult and a lot of work to make happen.
Study lots of businesses, then buy parts of - or preferably the
whole thing - of very good businesses that sell at a fair price.
He is willing to buy substantial shares of companies on the stock
market (think his Wells Fargo, Coke, and IBM investments).
He prefers to swallow companies whole, if he can (think GEICO,
BNSF, MidAmerican Energy).
That's it. That's the "code."
Requires a lot of reading of annual reports and the like.
Buffett has been known to take out whole page ads in the Wall
Street Journal, giving his business buying criteria and preferring
to hear directly from business owners who are interested in selling
their businesses.
So, here comes my (first of many) calls for businesses, Buffett
style:
I am on the lookout for really good businesses to buy.
I plan on using my own money, and also bringing on investors, to
purchase them. We would be able to do an all cash deal.
Criteria:
1. Prefer something in the manufacturing or distribution industries
(doesn't have to be oil and gas related but definitely can be)
2. Business must be profitable and in existence for some time
3. The owners must be willing to sell and have a rough price in mind
4. There must be local management ready to step up, or the owners
can certainly stay on as managing employees if they want
Do you know of any businesses like this?
Do you have a business like this?
Do you want to invest with me in businesses like this, or know
someone that does?
No brokers, please.
However, if you refer us to a business that we ultimately buy, a
nice finder's fee is in order (in addition to a box of
cigars!). If you refer us to investors, a nice finder's fee is
also in order.
Anyway, that's my pitch, Buffett style. If you have some
advice or a lead, just reply to this e-mail.