INTRODUCTION

Entrepreneurship is a distinct activity relating to production/distribution of goods and

services to earn rewards and to assume risks. It can be said that entrepreneurship is what the
modern world is all about. Without entrepreneurship, modern world would not have
witnessed inventions and innovations. The entrepreneur acts as a catalyst of growth and
development in todays modern world.
Entrepreneurship management is a process of planning, organizing, directing, and controlling,
performed to determine and accomplish objectives in business enterprises.

WARREN BUFFETT

HIS EARLY LIFE:

Buffett was born in 1930 in Omaha, Nebraska, of distant French Huguenot descent. He was
the second of three children and the only son of Leila (ne 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 Schooling 1947, where his senior
yearbook picture reads: "likes math; a future stockbroker."
Buffett displayed an interest in business and investing at a young age. One of his first
business ventures, Buffett sold chewing gum, Coca-Cola bottles, or 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 3 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 sister
Doris Buffett founder The Sunshine Lady Foundation. 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 a princely sum of more than $90,000 in savings measured in
2009 dollars.
In 1947, Buffett entered the Wharton School of the University of Pennsylvania. He would
have preferred to focus on his business ventures; however, he enrolled due to pressure from
his father. Warren studied there for two years and joined the Alpha Sigma Phi fraternity. He
then transferred to the University of NebraskaLincoln where at nineteen, he graduated with
a Bachelor of Science in business administration. After being rejected by Harvard Business
School, Buffett enrolled at Columbia Business School upon learning that Benjamin
Graham taught there. He earned a Master of Science in economics from Columbia in 1951.
Buffett also attended the New York Institute of Finance.

PERSONAL LIFE
Buffett

married Susan

Buffett (ne

Thompson)

in

1952.

They

had

three

children, Susie, Howard and Peter. The couple began living separately in 1977, although they
remained married until Susan Buffett's death in July 2004. Their daughter, Susie, lives in
Omaha, is a national board member of Girls, Inc. and does charitable work through the Susan
A. Buffett Foundation.
In 2006, on his 76th birthday, Buffett married his long time companion, Astrid Menks, who
was then 60 years oldshe had lived with him since his wife's departure to San Francisco in
1977. Susan had arranged for the two to meet before she left Omaha to pursue her singing
career. All three were close and Christmas cards to friends were signed "Warren, Susie and
Astrid". Susan briefly discussed this relationship in an interview on the Charlie Rose
Show shortly before her death, in a rare glimpse into Buffett's personal life.
Buffett disowned his son Peter's adopted daughter, Nicole, in 2006 after she participated in
the Jamie Johnson documentary, The One Percent. Although his first wife referred to Nicole
as one of her "adored grandchildren", Buffett wrote her a letter stating, "I have not
emotionally or legally adopted you as a grandchild, nor have the rest of my family adopted
you as a niece or a cousin."
His 2006 annual salary was about US$100,000, which is small compared to senior executive
remuneration in comparable companies. In 2007 and 2008, he earned a total compensation of
$175,000, which included a base salary of just $100,000. He continued to live in the same
house in the central Dundee neighbourhood of Omaha that he bought in 1958 for $31,500, a
fraction of today's value. He also owns a $4 million house in Laguna Beach, California. In
1989, after spending nearly $6.7 million of Berkshire's funds on a private jet, Buffett named it
"The Indefensible". This act was a break from his past condemnation of extravagant
purchases by other CEOs and his history of using more public transportation.
Buffett is an avid bridge player, which he plays with fellow fan Gateshe allegedly spends
12 hours a week playing the game. In 2006, he sponsored a bridge match for the Buffett Cup.
Modeled on the Ryder Cup in golfheld immediately before it in the same citythe teams
are chosen by invitation, with a female team and five male teams provided by each country.
He is a dedicated, lifelong follower of Nebraska football, and attends as many games as his
schedule permits. He supported the hire of Bo Pelini, following the 2007 season, stating, "It
4

was getting kind of desperate around here". He watched the 2009 game against Oklahoma
from the Nebraska side line, after being named an honorary assistant coach.
Buffett worked with Christopher Webber on an animated series with chief Andy Heyward,
of DiC Entertainment. The series features Buffett and Munger, and teaches children healthy
financial habits.
Buffett was raised as a Presbyterian, but has since described himself as agnostic. In
December 2006, it was reported that Buffett does not carry a mobile phone, does not have a
computer at his desk, and drives his own automobile, a Cadillac DTS. In 2013 he had an old
Nokia flip phone and had sent one email in his entire life. Buffett reads five newspapers every
day, beginning with the Omaha World Herald, which his company acquired in 2011.
A September 2014 Fast Company article featured Buffett's avoid at all cost practice, used
to prioritize personal goals. Buffett advises people to first create a list of the top 25
accomplishments that they would like to complete over the next few years of their life, and to
then pick the five most-important list items. Buffett stated that people need to avoid at all
cost the initial, longer list, as it would hinder the achievement of the top-five.
Health:
On April 11, 2012, Buffett was diagnosed with stage I prostate cancer during a routine
test. He announced he would begin two months of daily radiation treatment from mid-July;
however, in a letter to shareholders, Buffett said he felt "great - as if I were in my normal
excellent health - and my energy level is 100 percent". On September 15, 2012, Buffett
announced that he had completed the full 44-day radiation treatment cycle, saying "it's a great
day for me" and "I am so glad to say that's over".
Recognition:
In 1999, Buffett was named the top money manager of the Twentieth Century in a survey by
the Carson Group, ahead of Peter Lynch and John Templeton. In 2007, he was listed
among Time's 100 Most Influential People in the world. In 2011, President Barack
Obama awarded him the Presidential Medal of Freedom. Most recently, Buffett, along
with Bill Gates, was named the most influential global thinker in Foreign Policy's 2010
report.
Politics:

In addition to political contributions over the years, Buffett endorsed and made campaign
contributions to Barack Obama's presidential campaign. On July 2, 2008, Buffett attended a
$28,500 per plate fundraiser for Obama's campaign in Chicago. Buffett intimated that John
McCain's views on social justice were so far from his own that McCain would need a
"lobotomy" for Buffett to change his endorsement. During the second 2008 U.S. presidential
debate, McCain and Obama, after being asked first by presidential debate mediator Tom
Brokaw, both mentioned Buffett as a possible future Secretary of the Treasury. Later, in the
third and final presidential debate, Obama mentioned Buffett as a potential economic
advisor. Buffett was also finance advisor to California Republican Governor Arnold
Schwarzenegger during his 2003 election campaign.
Writings:
Warren Buffett's writings include his annual reports and various articles. Buffett is recognized
by communicators as a great story-teller, as evidenced by his annual letters to shareholders.
He warned about the pernicious effects of inflation.
The arithmetic makes it plain that inflation is a far more devastating tax than anything that
has been enacted by our legislatures. The inflation tax has a fantastic ability to simply
consume capital. It makes no difference to a widow with her savings in a 5 percent passbook
account whether she pays 100 percent income tax on her interest income during a period of
zero inflation, or pays no income taxes during years of 5 percent inflation.
Buffett, Fortune (1977)
In his article "The Super investors of Graham-and-Doddsville", Buffett rebutted the
academic Efficient-market hypothesis, that beating the S&P 500 was "pure chance", by
highlighting the results achieved by a number of students of the Graham and Dodd value
investing school of thought. In addition to himself, Buffett named Walter J. Schloss, Tom
Knapp, Ed Anderson (Tweedy, Brown Inc.), William J. Ruane (Sequoia Fund, Inc.), Charles
Munger (Buffett's own business partner at Berkshire), Rick Guerin (Pacific Partners, Ltd.),
and Stan Perlmeter (Perlmeter Investments). In his November 1999 Fortune article, he
warned of investors' unrealistic expectations:
Let me summarize what I've been saying about the stock market: I think it's very hard to
come up with a persuasive case that equities will over the next 17 years perform anything like
anything likethey've performed in the past 17. If I had to pick the most probable return,
6

from appreciation and dividends combined, that investors in aggregaterepeat, aggregate

would earn in a world of constant interest rates, 2% inflation, and those ever hurtful frictional
costs, it would be 6%!
Buffett, Fortune (1999)
Style:
Buffett's speeches are known for mixing business discussions with attempts at humor. Each
year, Buffett presides over Berkshire Hathaway's annual shareholder meeting in the Qwest
center in Omaha, Nebraska, an event drawing over 20,000 visitors from both United States
and abroad, giving it the nickname "Woodstock of Capitalism". Berkshire's annual reports
and letters to shareholders, prepared by Buffett, frequently receive coverage by the financial
media. Buffett's writings are known for containing quotations from sources as varied as
the Bible and Mae West, as well as advice in a folksy Midwestern style and numerous jokes.
Wealth:
In 2008 he was ranked by Forbes as the richest person in the world with an estimated net
worth of approximately US$62 billion. In 2009, after donating billions of dollars to charity,
Buffett was ranked as the second richest man in the United States with a net worth of
US$37 billion with only Bill Gates ranked higher than Buffett. His net worth had risen to
$58.5 billion as of September 2013.
Philanthropy:
The following quote from 1988 highlights Buffett's thoughts on his wealth and why he
planned to re-allocate it.
I don't have a problem with guilt about money. The way I see it is that my money represents
an enormous number of claim checks on society. It's like I have these little pieces of paper
that I can turn into consumption. If I wanted to, I could hire 10,000 people to do nothing but
paint my picture every day for the rest of my life. And the GDP would go up. But the utility
of the product would be zilch, and I would be keeping those 10,000 people from doing AIDS
research, or teaching, or nursing. I don't do that though. I don't use very many of those claim
checks. There's nothing material I want very much. And I'm going to give virtually all of
those claim checks to charity when my wife and I die. (Lowe 1997:165166)

From an article by The New York Times: "I don't believe in dynastic wealth", he said, calling
those who grow up in wealthy circumstances "members of the lucky sperm club". Buffett has
written several times of his belief that, in a market economy, the rich earn outsized rewards
for their talents.
A market economy creates some lopsided payoffs to participants. The right endowment of
vocal chords, anatomical structure, physical strength, or mental powers can produce
enormous piles of claim checks (stocks, bonds, and other forms of capital) on future national
output. Proper selection of ancestors similarly can result in lifetime supplies of such tickets
upon birth. If zero real investment returns diverted a bit greater portion of the national output
from such stockholders to equally worthy and hardworking citizens lacking jackpotproducing talents, it would seem unlikely to pose such an insult to an equitable world as to
risk Divine Intervention.
His children will not inherit a significant proportion of his wealth. This is consistent with
statements he has made in the past indicating his opposition to the transfer of great fortunes
from one generation to the next. Buffett once commented, "I want to give my kids just
enough so that they would feel that they could do anything, but not so much that they would
feel like doing nothing".
In June 2006, he announced a plan to give away his fortune to charity, with 83% of it going to
the Bill & Melinda Gates Foundation. He pledged about the equivalent of 10
million Berkshire Hathaway Class B shares to the Bill & Melinda Gates Foundation (worth
approximately US$30.7 billion as of June 23, 2006), making it the largest charitable donation
in history, and Buffett one of the leaders of philanthro capitalism. The foundation will receive
5% of the total each July, beginning in 2006. (Significantly, however, the pledge is
conditional upon the foundation's giving away each year, beginning in 2009, an amount that
is at least equal to the value of the entire previous year's gift from Buffett, in addition to 5%
of the foundation's net assets.) Buffett joined the Gates Foundation's board, although he did
not plan to be actively involved in the foundation's investments.
This represented a significant shift from Buffett's previous statements, to the effect that most
of his fortune would pass to his Buffett Foundation. The bulk of the estate of his wife, valued
at $2.6 billion, went to there when she died in 2004. He also pledged $50-million to
the Nuclear Threat Initiative, in Washington, where he began serving as an adviser in 2002.

In 2006, he auctioned his 2001 Lincoln Town Car on eBay to raise money for Girls, Inc. In
2007, he auctioned a luncheon with himself that raised a final bid of $650,100 for the Glide
Foundation. Later auctions raised $2,110,100, $1.68 million and $3,456,789. The winners
traditionally dine with Buffett at New York's Smith and Wollensky steak house. The
restaurant donates at least $10,000 to Glide each year to host the meal.
In a letter to Fortune Magazine's website in 2010 Buffett remarked:
My luck was accentuated by my living in a market system that sometimes produces distorted
results, though overall it serves our country well... I've worked in an economy that rewards
someone who saves the lives of others on a battlefield with a medal, rewards a great teacher
with thank-you notes from parents, but rewards those who can detect the mispricing of
securities with sums reaching into the billions. In short, fate's distribution of long straws is
wildly capricious.
This statement was made as part of a joint proposal with Gates to encourage other wealthy
individuals to pool parts of their fortunes for charitable purposes.
On December 9, 2010, Buffett, Bill Gates, and Facebook CEO Mark Zuckerberg, signed a
promise they called the "Gates-Buffett Giving Pledge", in which they promised to donate to
charity at least half of their wealth over time, and invited others among the wealthy to follow
suit.

BUSINESS 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 beginning in 1970; and as Chairman and CEO
of Berkshire Hathaway Inc.
By 1950, at 20, Buffett had made and saved $9,800 (over $96,000 inflation adjusted for the
2014 USD). 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, however, 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 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. However, this was not successful.
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 (approximately $105,000inflation
adjusted for the 2012 USD). There he worked closely with Walter Schloss. Graham was a
tough boss. He was adamant that stocks provide a wide margin of safety after weighting the
trade-off between their price and their intrinsic value. The argument made sense to Buffett but
he questioned whether the criteria were too stringent and caused the company to miss out on
big winners that had other appealing features. That same year the Buffetts 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 ($1.47 million 2012 USD) and he started
Buffett Partnership Ltd.

10

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 Sanborn Map
Company accounted for 35% of the partnership's assets. He explained that in 1958 Sanborn
stock sold at only $45 per share when the value of the Sanborn investment portfolio was $65
per share. This meant that buyers valued Sanborn stock at "minus $20" per share and were
unwilling to pay more than 70 cents on the dollar for an investment portfolio with a map
business thrown in for nothing. This earned him a spot on Sanborn's board.
As a millionaire:
In 1962, Buffett became a millionaire because of his partnerships, which in January 1962 had
an excess of $7,178,500, of which over $1,025,000 belonged to Buffett. He merged these
partnerships into one. Buffett invested in and eventually took control of a textile
manufacturing firm, Berkshire Hathaway. He began buying shares in Berkshire from Seabury
Stanton, the owner, whom he later fired. Buffett's partnerships began purchasing shares at
$7.60 per share. In 1965, when Buffett's partnerships began purchasing Berkshire
aggressively, they paid $14.86 per share while the company had working capital of $19 per
share. This did not include the value of fixed assets (factory and equipment). Buffett took
control of Berkshire Hathaway at a board meeting and named a new president, Ken Chace, to
run the company. In 1966, Buffett closed the partnership to new money. He later claimed that
the textile business had been his worst trade. He then moved the business into the insurance
sector, and, in 1985, the last of the mills that had been the core business of Berkshire
Hathaway was sold. Buffett wrote in his letter: "... unless it appears that circumstances have
changed (under some conditions added capital would improve results) or unless new partners
can bring some asset to the partnership other than simply capital, I intend to admit no
additional partners to BPL."
In a second letter, Buffett announced his first investment in a private business Hochschild,
Kohn and Co, a privately owned Baltimore department store. In 1967, Berkshire paid out its
first and only dividend of 10 cents. In 1969, following his most successful year, Buffett
11

liquidated the partnership and transferred their assets to his partners. Among the assets paid
out were shares of Berkshire Hathaway. In 1970, Buffett began writing his now-famous
annual letters to shareholders. However, he lived solely on his salary of $50,000 per year and
his outside investment income. In 1979, Berkshire began the year trading at $775 per share,
and ended at $1,310. Buffett's net worth reached $620 million, placing him on the Forbes
400 for the first time.
In 1973, Berkshire began to acquire stock in the Washington Post Company. Buffett became
close friends with Katharine Graham, who controlled the company and its flagship
newspaper, and joined its board. In 1974, the SEC opened a formal investigation into Buffett
and Berkshire's acquisition of WESCO, due to possible conflict of interest. No charges were
brought. In 1977, Berkshire indirectly purchased the Buffalo Evening News for $32.5 million.
Antitrust charges started, instigated by its rival, the Buffalo Courier-Express. Both papers lost
money, until the Courier-Express folded in 1982.
In 1979, Berkshire began to acquire stock in ABC. Capital Cities announced a $3.5 billion
purchase of ABC on March 18, 1985 surprising the media industry, as ABC was four times
bigger than Capital Cities at the time. Buffett helped finance the deal in return for a 25%
stake in the combined company. The newly merged company, known as Capital Cities/ABC
(or CapCities/ABC), was forced to sell some stations due to U.S. Federal Communications
Commission ownership rules. The two companies also owned several radio stations in the
same markets.
In 1987, Berkshire Hathaway purchased a 12% stake in Salomon Inc., making it the largest
shareholder and Buffett a director. In 1990, a scandal involving John Gutfreund (former CEO
of Salomon Brothers) surfaced. A rogue trader, Paul Mozer, was submitting bids in excess of
what was allowed by Treasury rules. When this was brought to Gutfreund's attention, he did
not immediately suspend the rogue trader. Gutfreund left the company in August
1991. Buffett became Chairman of Salomon until the crisis passed.
In 1988, Buffett began buying Coca-Cola Company stock, eventually purchasing up to 7% of
the company for $1.02 billion. It would turn out to be one of Berkshire's most lucrative
investments, and one which it still holds.
As a billionaire:

12

Buffett became a paper billionaire when Berkshire Hathaway began selling class A shares on
May 29, 1990, with the market closing at US$7,175 a share. In 1998 he acquired General
Re (Gen Re) as a subsidiary in a deal that presented difficultiesaccording the Rational
Walk investment website, "underwriting standards proved to be inadequate," while a
"problematic derivatives book" was resolved after numerous years and a significant loss. Gen
Re

later

provided reinsurance after

Buffett

became

involved

withMaurice

R.

Greenberg at AIG in 2002.

During a 2005 investigation of an accounting fraud case involving AIG, Gen Re executives
became implicated. On March 15, 2005, the AIG board forced Greenberg to resign from his
post as Chairman and CEO after New York state regulators claimed that AIG had engaged in
questionable transactions and improper accounting.[43] On February 9, 2006, AIG agreed to
pay a US$1.6 billion fine. In 2010 the U.S. government agreed to a US$92 million settlement
with Gen Re, allowing the Berkshire Hathaway subsidiary to avoid prosecution in the AIG
case. Gen Re also made a commitment to implement "corporate governance concessions,"
which required Berkshire Hathaways Chief Financial Officer to attend General Res audit
committee meetings and mandated the appointment of an independent director.
In 2002, Buffett entered in US$11 billion worth of forward contracts to deliver U.S. dollars
against other currencies. By April 2006, his total gain on these contracts was over
US$2 billion. In 2006, Buffett announced in June that he gradually would give away 85% of
his Berkshire holdings to five foundations in annual gifts of stock, starting in July 2006the
largest contribution would go to the Bill and Melinda Gates Foundation.
In 2007, in a letter to shareholders, Buffett announced that he was looking for a younger
successor, or perhaps successors, to run his investment business. Buffett had previously
selected Lou Simpson, who runs investments at Geico, to fill the role; however, Simpson is
only six years younger than Buffett.
On August 14, 2014, the price of Berkshire Hathaway's shares hit US$200,000 a share for the
first time, capitalizing the company at US$328 billion. While Buffett had given away much
of his stock to charities by this time, he still held 321,000 shares worth US$64.2 billion. On
August 20, 2014, Berkshire Hathaway was fined $896,000 for failing to report December 9,
2013 purchase of shares in USG Corporation as required.
Great Recession:

13

Buffett ran into criticism during the subprime crisis of 20072008, part of the recession that
started in 2007, that he had allocated capital too early resulting in suboptimal deals. "Buy
American. I am." he wrote for an opinion piece published in the New York Times in
2008. Buffett called the downturn in the financial sector that started in 2007 "poetic
justice". Buffett's Berkshire Hathaway suffered a 77% drop in earnings during Q3 2008 and
several of his later deals suffered large mark-to-market losses.
Berkshire Hathaway acquired 10% perpetual preferred stock of Goldman Sachs. Some of
Buffett's put options (European exercise at expiry only) that he wrote (sold) were running at
around $6.73 billion mark-to-market losses as of late 2008. The scale of the potential loss
prompted the SEC to demand that Berkshire produce, "a more robust disclosure" of factors
used to value the contracts. Buffett also helped Dow Chemical pay for its $18.8 billion
takeover of Rohm & Haas. He thus became the single largest shareholder in the enlarged
group with his Berkshire Hathaway, which provided $3 billion, underlining his instrumental
role during the crisis in debt and equity markets.
In 2008, Buffett became the richest person in the world, with a total net worth estimated at
$62 billion by Forbes and at $58 billion by Yahoo, overtaking Bill Gates, who had been
number one on the Forbes list for 13 consecutive years. In 2009, Gates regained the top
position on the Forbes list, with Buffett shifted to second place. Both of the men's values
dropped, to $40 billion and $37 billion respectivelyaccording to Forbes, Buffett lost
$25 billion over a 12-month period during 2008/2009.
In October 2008, the media reported that Buffett had agreed to buy General Electric (GE)
preferred stock. The operation included special incentives: He received an option to buy
3 billion of GE stock, at $22.25, over the five years following the agreement, and Buffett also
received a 10% dividend (callable within three years). In February 2009 Buffett sold some
Procter & Gamble Co. and Johnson & Johnson shares from his personal portfolio.
In addition to suggestions of mistiming, the wisdom in keeping some of Berkshire's major
holdings, including the Coca-Cola Company which in 1998 peaked at $86, raised questions.
Buffett discussed the difficulties of knowing when to sell in the company's 2004 annual
report:
That may seem easy to do when one looks through an always-clean, rear-view mirror.
Unfortunately, however, it's the windshield through which investors must peer, and that glass
is invariably fogged.
14

In March 2009, Buffett said in a cable television interview that the economy had "fallen off a
cliff ... Not only has the economy slowed down a lot, but people have really changed their
habits like I haven't seen". Additionally, Buffett feared that inflation levels that occurred in
the 1970swhich led to years of painful stagflationmight re-emerge.
In 2009, Buffett invested $2.6 billion as a part of Swiss Re's campaign to raise equity
capital. Berkshire Hathaway already owned a 3% stake, with rights to own more than
20%. Also in 2009, Buffett acquired Burlington Northern Santa Fe Corp. for $34 billion in
cash and stock. Alice Schroeder, author of Snowball, said that a key reason for the purchase
was to diversify Berkshire Hathaway from the financial industry. Measured by market
capitalization in the Financial Times Global 500, Berkshire Hathaway was the eighteenth
largest corporation in the world as of June 2009.
In 2009, Buffett divested his failed investment in ConocoPhillips, saying to his Berkshire
investors,
I bought a large amount of ConocoPhillips stock when oil and gas prices were near their
peak. I in no way anticipated the dramatic fall in energy prices that occurred in the last half of
the year. I still believe the odds are good that oil sells far higher in the future than the current
$40$50 price. But so far I have been dead wrong. Even if prices should rise, moreover, the
terrible timing of my purchase has cost Berkshire several billion dollars.
The merger with the Burlington Northern Santa Fe Railway (BNSF) closed upon BNSF
shareholder approval in 1Q2010. This deal was valued at approximately $34 billion and
represented an increase of the previously existing stake of 22%.
In June 2010 Buffett defended the credit-rating agencies for their role in the US financial
crisis, claiming:
Very, very few people could appreciate the bubble. That's the nature of bubbles they're mass
delusions.
On March 18, 2011, Goldman Sachs was given Federal Reserve approval to buy back
Berkshire's preferred stock in Goldman. Buffett had been reluctant to give up the stock,
which averaged $1.4 million in dividends per day saying:

15

I'm going to be the Osama bin Laden of capitalism. I'm on my way to an unknown destination
in Asia where I'm going to look for a cave. If the U.S. Armed forces can't find Osama bin
Laden in 10 years, let Goldman Sachs try to find me.
In November 2011, it was announced that over the course of the previous eight months,
Buffett had bought 64 million shares of International Business Machine Corp (IBM) stock,
worth around $11 billion. This unanticipated investment raised his stake in the company to
around 5.5 percentthe largest stake in IBM alongside that of State Street Global Advisors.
Buffett had said on numerous prior occasions that he would not invest in technology because
he did not fully understand it, so the move came as a surprise to many investors and
observers. During the interview, in which he revealed the investment to the public, Buffett
stated that he was impressed by the company's ability to retain corporate clients and said, "I
don't know of any large company that really has been as specific on what they intend to do
and how they intend to do it as IBM."
In May 2012, Buffett's acquisition of Media General, consisting of 63 newspapers in the
south-eastern U.S., was announced. The company was the second news print purchase made
by Buffett in one year.
Interim publisher James W. Hopson announced on July 18, 2013 that the Press of Atlantic
City would be sold to Buffetts BH Media Group by ABARTA, a private holding company
based in Pittsburgh, U.S. At the Berkshire shareholders meeting in May 2013, Buffett
explained that he did not expect to "move the needle" at Berkshire with newspaper
acquisitions, but he anticipates an annual return of 10 percent. The Press of Atlantic
City became Berkshire's 30th daily newspaper, following other purchases such as Virginia,
U.S.'Roanoke Times and The Tulsa World in Oklahoma, U.S.
During a presentation to Georgetown University students in Washington, D.C. in late
September 2013, Buffett compared the U.S. Federal Reserve to a hedge fund and stated that
the bank is generating "$80 billion or $90 billion a year probably" in revenue for the U.S.
government. Buffett also advocated further on the issue of wealth equality in society:
We have learned to turn out lots of goods and services, but we havent learned as well how to
have everybody share in the bounty. The obligation of a society as prosperous as ours is to
figure out how nobody gets left too far behind.

16

After the sharp difficulties of the economic crisis, Buffett managed to bring its company back
to its pre-recession standards: in Q2 2014, Berkshire Hathaway made $6.4 billion in net
profit, the most it had ever made in a three-month period.

BERKSHIRE HATHAWAY
HISTORY:
Berkshire Hathaway traces its roots to a textile manufacturing company established by Oliver
Chace in 1839 as the Valley Falls Company in Valley Falls, Rhode Island. Chace had
previously worked for Samuel Slater, the founder of the first successful textile mill in
America. Chace founded his first textile mill in 1806. In 1929 the Valley Falls Company
merged with the Berkshire Cotton Manufacturing Company established in 1889, in Adams,
Massachusetts. The combined company was known as Berkshire Fine Spinning Associates.
In 1955 Berkshire Fine Spinning Associates merged with the Hathaway Manufacturing
Company which had been founded in 1888 in New Bedford, Massachusetts by Horatio
Hathaway with profits from whaling and the China Trade. Hathaway had been successful in
its first decades, but it suffered during a general decline in the textile industry after World
War I. At this time, Hathaway was run by Seabury Stanton, whose investment efforts were
rewarded with renewed profitability after the Depression. After the merger Berkshire
Hathaway had 15 plants employing over 12,000 workers with over $120 million
in revenue and was headquartered in New Bedford. However, seven of those locations were
closed by the end of the decade, accompanied by large layoffs.
In 1962, Warren Buffett began buying stock in Berkshire Hathaway after noticing a pattern in
the price direction of its stock whenever the company closed a mill. Eventually, Buffett
acknowledged that the textile business was waning and the company's financial situation was
not going to improve. In 1964, Stanton made an oral tender offer of $1112 per share for the
company to buy back Buffett's shares. Buffett agreed to the deal. A few weeks later, Warren
Buffett received the tender offer in writing, but the tender offer was for only $1138. Buffett
later admitted that this lower, undercutting offer made him angry. [9] Instead of selling at the
slightly lower price, Buffett decided to buy more of the stock to take control of the company
and fire Stanton (which he did). However, this put Buffett in a situation where he was now
majority owner of a textile business that was failing.
17

Buffett initially maintained Berkshire's core business of textiles, but by 1967, he was
expanding into the insurance industry and other investments. Berkshire first ventured into the
insurance business with the purchase of National Indemnity Company. In the late 1970s,
Berkshire acquired an equity stake in the Government Employees Insurance Company
(GEICO), which forms the core of its insurance operations today (and is a major source of
capital for Berkshire Hathaway's other investments). In 1985, the last textile operations
(Hathaway's historic core) were shut down.
In 2010, Buffett claimed that purchasing Berkshire Hathaway was the biggest investment
mistake he had ever made, and claimed that it had denied him compounded investment
returns of about $200 billion over the subsequent 45 years.[9] Buffett claimed that had he
invested that money directly in insurance businesses instead of buying out Berkshire
Hathaway (due to what he perceived as a slight by an individual), those investments would
have paid off several hundredfold.
CORPORATE AFFAIRS:
Berkshire's class A shares sold for $227,720 as of December 23, 2014, making them the
highest-priced shares on the New York Stock Exchange, in part because they have never had
a stock split and have only paid a dividend once since Warren Buffett took over, retaining
corporate earnings on its balance sheet in a manner that is impermissible for private investors
and mutual funds. Shares closed over $100,000 for the first time on October 23, 2006.
Despite its size, Berkshire has not been included in broad stock market indices such as
the S&P 500 due to the lack of liquidity in its shares; however, following a 50-to-1 split of
Berkshire's class B shares in January 2010, and Berkshire's announcement that it would
acquire the Burlington Northern Santa Fe Corporation, parent of BNSF Railway, Berkshire
replaced BNSF in the S&P 500 on February 16, 2010.
Berkshire CEO Warren Buffett's annual letters are widely read and quoted. Barron's
Magazine named Berkshire the most respected company in the world in 2007 based on a
survey of American money managers.
In 2008, Berkshire invested in preferred stock of Goldman Sachs as part of a recapitalization
of the investment bank. Buffett defended Goldman CEO Lloyd Blankfein's $13.2 million pay
package when the company had taken and not yet paid back $10 billion in Troubled Asset
Relief Program (TARP) money from the United States Department of Treasury.

18

As of July 1, 2010, Buffett owned 32.4% aggregate voting power of Berkshire's shares
outstanding and 23.3% of the economic value of those shares. [17] Berkshire's vicechairman, Charlie Munger, also holds a stake big enough to make him a billionaire, and early
investments in Berkshire by David Gottesman and Franklin Otis Booth, Jr. resulted in their
becoming billionaires as well. Bill Gates' Cascade Investment LLC is the second largest
shareholder of Berkshire and owns more than 5% of class B shares.
Berkshire Hathaway has never split its Class A shares because of management's desire to
attract long-term investors as opposed to short-term speculators. However, Berkshire
Hathaway created a Class B stock, with a per-share value originally kept (by specific
management rules) close to 130 of that of the original shares (now Class A) and 1200 of the pershare voting rights, and after the January 2010 split, at 11,500 the price and 110,000 the voting
rights of the Class-A shares. Holders of class A stock are allowed to convert their stock to
Class B, though not vice versa. Buffett was reluctant to create the class B shares, but did so to
thwart the creation of unit trusts that would have marketed themselves as Berkshire lookalikes. As Buffett said in his 1995 shareholder letter: "The unit trusts that have recently
surfaced fly in the face of these goals. They would be sold by brokers working for big
commissions, would impose other burdensome costs on their shareholders, and would be
marketed en masse to unsophisticated buyers, apt to be seduced by our past record and
beguiled by the publicity Berkshire and I have received in recent years. The sure outcome: a
multitude of investors destined to be disappointed."
Berkshire's annual shareholders' meetings, taking place in the CenturyLink Center in Omaha,
Nebraska, are routinely visited by 20,000 people. The 2007 meeting had an attendance of
approximately 27,000. The meetings, nicknamed "Woodstock for Capitalists", are considered
Omaha's largest annual event along with the baseball College World Series. Known for their
humor and light-heartedness, the meetings typically start with a movie made for Berkshire
shareholders. The 2004 movie featured Arnold Schwarzenegger in the role of "The
Warrenator" who travels through time to stop Buffett and Munger's attempt to save the world
from a "mega" corporation formed by Microsoft-Starbucks-Wal-Mart. Schwarzenegger is
later shown arguing in a gym with Buffett regarding Proposition 13.[20] The 2006 movie
depicted actresses Jamie Lee Curtis and Nicollette Sheridan lusting after Munger.[21] The
meeting, scheduled to last six hours, is an opportunity for investors to ask Buffett questions.

19

The salary for the CEO is $100,000 per year with no stock options, which is among the
lowest salaries for CEOs of large companies in the United States.[23]
Governance:
The current members of the board of directors of Berkshire Hathaway are Warren
Buffett (CEO), Charlie Munger, Walter Scott, Jr., Thomas S. Murphy, Howard Graham
Buffett (Warren's son), Ronald Olson, Charlotte Guyman, David Gottesman, Bill Gates, Steve
Burke, Susan Decker, and Meryl Witmer.
Succession plans:
In May 2010, Buffett, months away from his 80th birthday, said he would be succeeded at
Berkshire Hathaway by a team consisting of a CEO and three or four investment managers;
each of the latter would be responsible for a "significant portion of Berkshire's investment
portfolio". Five months later, Berkshire announced that Todd Combs, manager of the hedge
fund Castle Point Capital, would join them as an investment manager. On September 12,
2011, Berkshire Hathaway announced that 50-year-old Ted Weschler, founder of Peninsula
Capital Advisors, will join Berkshire in early 2012 as a second investment manager.
In Berkshire Hathaway's annual shareholder letter dated February 25, 2012, Buffett said that
his successor as CEO had been chosen internally but not named publicly. While the intent of
this message was to bolster confidence in the leadership of a "Buffett-less Berkshire", critics
have noted that this strategy of choosing a successor without a concrete exit strategy for the
sitting CEO often leaves an organization with fewer long term options, while doing little to
calm shareholder fear. In reaction to the announcement,Stephen A. Miles, a leadership
consultant who specializes in CEO succession, noted, "You see this more often with
successful founder CEOs. Because theyre so good, they want to take the lead in choosing
their replacement, [but] most boards try to avoid what [Buffett] did."
In June 2014, the firm's cash and cash equivalents rose past $50 billion, the first time it
finished a quarter above that level since Buffett became chairman and chief executive officer.
BUSINESSES AND INVESTMENTS:
Insurance group:
Insurance and reinsurance business activities are conducted through approximately 70
domestic and foreign-based insurance companies. Berkshires insurance businesses provide
20

insurance and reinsurance of property and casualty risks primarily in the United States. In
addition, as a result of the General Re acquisition in December 1998, Berkshires insurance
businesses also includes life, accident, and health reinsurers, as well as internationally based
property and casualty reinsurers. Berkshires insurance companies maintain capital strength at
exceptionally high levels. This strength differentiates Berkshires insurance companies from
their competitors. Collectively, the aggregate statutory surplus of Berkshires U.S. based
insurers was approximately $48 billion as of December 31, 2004. All of Berkshires major
insurance subsidiaries are rated AAA by Standard & Poors Corporation, the highest
Financial Strength Rating assigned by Standard & Poors, and are rated A++ (superior) by A.
M. Best with respect to their financial condition and operating performance.

GEICO Berkshire acquired GEICO in January 1996. GEICO is headquartered in Chevy

Chase, Maryland, and its principal insurance subsidiaries include: Government
Employees Insurance Company, GEICO General Insurance Company, GEICO Indemnity
Company, and GEICO Casualty Company. Over the past five years, these companies have
offered primarily private passenger automobile insurance to individuals in all 50 states
and the District of Columbia. GEICO markets its policies primarily through direct
response methods in which applications for insurance are submitted directly to the
companies via the Internet or by telephone.

Gen Re Berkshire acquired General Re in December 1998. General Re held a 91%

ownership interest in Cologne Re as of December 31, 2004. General Re subsidiaries
currently conduct global reinsurance business in approximately 72 cities and provide
reinsurance coverage worldwide. General Re operates the following reinsurance
businesses: North American property/casualty, international property/casualty, which
principally consists of Cologne Re and the Faraday operations, and life/health
reinsurance. General Res reinsurance operations are primarily based in Stamford,
Connecticut, and Cologne, Germany. General Re is one of the largest reinsurers in the
world based on net premiums written and capital.

NRG (Nederlandse Reassurantie Groep) Berkshire acquired NRG, a Dutch life

reinsurance company, from ING Group in December 2007.

Berkshire

Hathaway

Assurance

Berkshire

created

government bond

insurance company to insure municipal and state bonds. These type bonds are issued by

21

local governments to finance public works projects such as schools, hospitals, roads, and
sewer systems. Few companies are capable of competing in this area.
Utilities and energy group:
Berkshire currently holds 89.8% of the MidAmerican Energy Holdings Company. At the time
of purchase, Berkshire's voting interest was limited to 10% of the company's shares, but this
restriction ended when the Public Utility Holding Company Act of 1935 was repealed in
2005. A major subsidiary of MidAmerican is CE Electric UK.
MidAmerican Energy Holdings Co. has changed its name to Berkshire Hathaway Energy on
Apr 30, 2014
Clothing:
Berkshires clothing businesses include manufacturers and distributors of a variety of
clothing and footwear. Businesses engaged in the manufacture and distribution of clothing
include Union Underwear Corp. Fruit of the Loom, Garan, Fechheimer Brothers andRussell
Corporation. Berkshires footwear businesses include H.H. Brown Shoe Group, Acme
Boots, Brooks Sports and Justin Brands. Justin Brands is made up of Chippewa Boots, Justin
Boots, Justin Original Workboots, Nocona Boots, and Tony Lama Boots. Berkshire
acquired Fruit of the Loom on April 29, 2002 for $835 million in cash. Fruit of the Loom,
headquartered in Bowling Green, Kentucky, is a vertically integrated manufacturer of basic
clothing. Berkshire acquired Russell Corporation on August 2, 2006 for $600 million or
$18.00 per share.
Building products:
In August 2000, Berkshire entered the building products business with the acquisition
of Acme Building Brands. Acme, headquartered in Fort Worth, Texas, manufactures and
distributes clay bricks (Acme Brick), concrete block (Featherlite) and cut limestone (Texas
Quarries). It expanded its building products business in December 2000, when it
acquired Benjamin Moore & Co. of Montvale, New Jersey. Moore formulates, manufactures
and sells architectural coatings that are available primarily in the United States and Canada.
In 2001, Berkshire acquired three additional building products companies. In February, it
purchased Johns Manville which was established in 1858 and manufactures fiber glass wool
insulation products for homes and commercial buildings, as well as pipe, duct and equipment

22

insulation products. In July, Berkshire acquired a 90% equity interest in MiTek Inc., which
makes engineered connector products, engineering software and services, and manufacturing
machinery for the truss fabrication segment of the building components industry and is
headquartered in Chesterfield, Missouri. Finally in 2001, Berkshire acquired 87 percent
of Dalton, Georgia-based Shaw Industries, Inc. Shaw is the worlds largest carpet
manufacturer based on both revenue and volume of production and designs and manufactures
over 3,000 styles of tufted and woven carpet and laminate flooring for residential and
commercial use under approximately 30 brand and trade names and under certain private
labels. In 2002, Berkshire Acquired the remaining 12.7 percent of Shaw.
On August 7, 2003, Berkshire acquired Clayton Homes, Inc. Clayton, headquartered
near Knoxville, Tennessee, is a vertically integrated manufactured housing company. At yearend 2004, Clayton operated 32 manufacturing plants in 12 states. Claytons homes are
marketed in 48 states through a network of 1,540 retailers, 391 of which are company-owned
sales centers. On May 1, 2008, Mitek acquired Hohmann & Barnard a fabricator of anchors
and reinforcement systems for masonry and on October 3 of that year, Mitek acquired BlokLok, Ltd. of Toronto, Canada. On April 23, 2010, Mitek acquired the assets of Dur-O-Wal
from Dayton Superior.
Flight services:
In 1996, Berkshire acquired Flight Safety International Inc. FSIs corporate headquarters is
located at LaGuardia Airport in Flushing, New York. FSI engages primarily in the business of
providing high technology training to operators of aircraft and ships. Flight Safety is the
world's

leading

provider

of

professional

aviation

training

services.

Berkshire

acquired NetJets Inc. in 1998. NetJets is the worlds leading provider of fractional
ownership programs for general aviation aircraft. In 1986, NetJets created the fractional
ownership of aircraft concept and introduced its NetJets program in the United States with
one aircraft type. In 2004, the NetJets program operated 15 aircraft types.
Retail:
The home furnishings businesses are the Nebraska Furniture Mart, RC Willey Home
Furnishings, Star Furniture Company, and Jordans Furniture, Inc. CORT Business Services
Corporation was acquired in 2000 by an 80.1% owned subsidiary of Berkshire and is the
leading national provider of rental furniture, accessories and related services in the rent-torent segment of the furniture rental industry.
23

In May 2000, Berkshire purchased Ben Bridge Jeweller, a chain of jewellery stores
established in 1912 with locations primarily in the western United States. This joined
Berkshire's other jeweller acquisition, Helzberg Diamonds. Helzberg is a chain of jewellery
stores based in Kansas City that began in 1915 and became part of Berkshire in 1995.
In 2002, Berkshire acquired The Pampered Chef, Ltd, the largest direct seller of kitchen tools
in the United States. Products are researched, designed and tested by The Pampered Chef, and
manufactured by third party suppliers. From its Addison, Illinois headquarters, The Pampered
Chef utilizes a network of more than 65,000 independent sales representatives to sell its
products through home-based party demonstrations, principally in the United States.
See's Candies produces boxed chocolates and other confectionery products in two large
kitchens in California. Sees revenues are highly seasonal with approximately 50% of total
annual revenues being earned in the months of November and December.
Dairy Queen, based in Edina, Minnesota, services a system of approximately 6,000 stores
operating under the names Dairy Queen, Orange Julius and Karmelkorn that offer various
dairy desserts, beverages, prepared foods, blended fruit drinks, popcorn and other snack
foods.
In November 2012, Berkshire announced they would acquire the Oriental Trading Company,
a direct marketing company for novelty items, small toys, and party items.
Media:
In 1977, Berkshire Hathaway purchased the Buffalo Evening News and resumed publication
of a Sunday edition of the paper that ceased in 1914. After the morning newspaper Buffalo
Courier-Express ceased operation in 1982, the paper began to print morning and evening
editions, currently printing only a morning edition. In 2006, the company bought Business
Wire, a U.S. press release agency.
The company began its BH Media Group subsidiary with a purchase of the Omaha WorldHerald in December 2011, which included six other daily newspapers and several weeklies
across Nebraska and southwest Iowa. In June 2012, Berkshire purchased 63 newspapers
from Media General Inc., including the Richmond Times-Dispatch and Winston-Salem
Journal, for $142 million in cash.

24

In 2012, Berkshire bought Texas dailies The Eagle in Bryan-College Station and the Waco
Tribune-Herald. In 2013, the company purchased the Tulsa World, the Greensboro, North
Carolina-based News & Record, Virginia's Roanoke Times, and Press of Atlantic City. As of
March 2013, BH Media owned 28 daily and 42 non-daily newspapers.
On March 12, 2014, it was announced that Graham Holdings Company would divest its
Miami television station WPLG to BH Media in a cash and stock deal.
Other non-insurance:
MidAmerican Energy Holdings Company's Home Services of America is a residential real
estate brokerage firm based in Minneapolis, Minnesota and founded in 1998. Home Services
has operations in 19 states and over 21,000 sales associates. In addition to brokerage services,
these real estate companies provide mortgage loan originations, title and closing services,
home warranties, property and casualty insurance and other related services. By the end of
2013 Berkshire Hathaway will enter the residential real estate brokerage sector under the
name of Home Services of America.
In 2002, Berkshire acquired Albecca Inc. Albecca is headquartered in Norcross, Georgia, and
primarily does business under the Larson-Juhl name. Albecca designs, manufactures and
distributes custom framing products, including wood and metal molding, matboard,
foamboard, glass, equipment and other framing supplies. Berkshire acquired CTB
International Corp. in 2002. CTB, headquartered in Milford, Indiana, is a designer,
manufacturer and marketer of systems used in the grain industry and in the production of
poultry, hogs, and eggs. Products are produced in the United States and Europe and are sold
primarily through a global network of independent dealers and distributors, with peak sales
occurring in the second and third quarters.
Berkshire acquired McLane Company, Inc. in May 2003 from Walmart , which brought on
other subsidiaries such as Professional Data solutions, Inc. and Salado Sales, among others.
McLane provides wholesale distribution and logistics services in all 50 states and
internationally in Brazil to customers that include discount retailers, convenience stores,
quick service restaurants, drug stores and movie theatre complexes. Scott Fetzer Companies
The Scott Fetzer Companies are a diversified group of 21 businesses that manufacture and
distribute a wide variety of products for residential, industrial and institutional use. The three
most significant of these businesses are Kirby home cleaning systems, Wayne Water Systems
and Campbell Hausfeld products. Scott Fetzer also manufactures Ginsu knives.
25

On March 30, 2007, Berkshire Hathaway announced TTI, Inc. to be part of the Berkshire
Hathaway Group. Headquartered in Fort Worth, Texas, TTI, Inc. is the largest distributor
specialist of passive, interconnect and electromechanical components. TTIs extensive
product line includes: resistors, capacitors, connectors, potentiometers, trimmers, magnetic
and circuit protection components, wire and cable, identification products, application tools
and electromechanical devices.
On December 25, 2007, Berkshire Hathaway acquired Marmon Group. Previously it was a
privately held conglomerate owned by the Pritzker family for over fifty years, which owned
and operated an assortment of manufacturing companies that produce railroad tank cars,
shopping carts, plumbing pipes, metal fasteners, wiring and water treatment products used in
residential construction.
On

November

14,

2014,

Berkshire

Hathaway

announced

that

it

would

acquire Duracell from Procter & Gamble for $4.7 billion in an all-stock deal.

26

INVESTMENT STYLE
Warren Buffett's investing style of discipline, patience and value has consistently
outperformed the market for decades. John Train, author of "The Money Masters"(1980),
provides us with a succinct description of Buffett's investment approach: "The essence
of Warren's thinking is that the business world is divided into a tiny number of wonderful
businesses well worth investing in at a price and a large number of bad or mediocre
businesses that are not attractive as long-term investments. Most of the time, most businesses
are not worth what they are selling for, but on rare occasions the wonderful businesses are
almost given away. When that happens, buy boldly, paying no attention to current gloomy
economic

and

stock

market

forecasts."

Buffett's criteria for "wonderful businesses" include, among others, the following:

They have a good return on capital without a lot of debt.

They are understandable.

They see their profits in cash flow.

They have strong franchises and, therefore, freedom to price.

They don't take a genius to run.

Their earnings are predictable.

The management is owner-oriented.

27

QUOTES
"Rule No.1 is never lose money. Rule No.2 is never forget rule number one."
"Shares are not mere pieces of paper. They represent part ownership of a business. So, when
contemplating an investment, think like a prospective owner."

"All there is to investing is picking good stocks at good times and staying with them as long
as they remain good companies."

"Look at market fluctuations as your friend rather than your enemy. Profit from folly rather
than participate in it."

"If, when making a stock investment, you're not considering holding it at least ten years,
don't waste more than ten minutes considering it."

It takes 20 years to build a reputation and five minutes to ruin it. If you think about that you
will do things differently.
Price is what you pay, value is what you get.

28

AWARDS AND RECOGNITION

He was presented with the Presidential Medal of Freedom by President Barack

Obama in 2011.
He is the chairman and CEO of Berkshire Hathaway and ranks among the worlds
wealthiest people. Considered to be the most successful investor of the 20th century,
he is also the biggest philanthropists of our times and had pledged to donate most of
his fortunes to social causes.

29

CORPORATE SOCIAL RESPONSIBILITY DONE BY WARREN

BUFFETT
In 2006 Warren Buffett announced he would donate 85% of his $44 billion fortune to charity,
naming the Gates Foundation as the main recipients. Buffett had previously planned to make
such a donation in his will, famously saying that he wanted to leave his children enough
money so they could do something, but not so much that they could do nothing, and inviting
comparisons to Andrew Carnegie, who liked to say that the man who dies rich dies
disgraced.
Buffett said that watching Bill and Melinda Gates donate so much of their wealth during their
lifetimes inspired him to kickstart the process of distributing his own wealth. Buffet is now a
trustee of the Gates Foundation, whose major focus is addressing global health. Last year Bill
and Melinda Gates, along with Buffett, who is now a Gates Foundation trustee, launched The
Giving Pledge, an initiative to encourage the richest Americans to donate more than half of
their wealth to philanthropic causes. Buffett led by example, upping his previous pledge and
promising to give away a full 99% of his wealth during his lifetime or at the time of his death.
The politics of the last several months make it hard to have charitable feelings about
billionaires, even when theyre being so charitable. Our national attention has turned to a
different 99%. In a country where its become a national pastime for almost everyone to
imagine themselves middle-class, this season has brought a surge of class consciousness, and
with it anger and frustration with superrich and frustration with the systems that create them.
In other words, its a hard time to pat billionaires on the back for their donations, no matter
how large. For those who can afford it, charitable giving is a moral obligation on par with the
responsibility to save a life.

30

CONCLUSION
Warren Buffett is a CEO of Berkshire Hathaway. The company is into many different
business such as retail, clothing, media etc. Warren Buffett started investing in stock market
in his early 20s.
As per the project we can conclude Warren Buffett is a very successful entrepreneur.

31