Always depend on the original source for seeking wisdom.

The Partnership Letters and the

shareholders Letters are the primary sources.

These sources throw light on how Buffett started his partnership firm Buffett Partnership
Limited[ BPL] and what were the fundamental or Ground Rules. It also shows the integrity and the
honesty with which he conducted his day to day affairs.

One of the striking features of the Partnership Letters is the way Buffett allocated his capital into three
categories:
The Generals- Undervalued Stocks
The Spin-offs or Special Situation Stocks
The Control Situations

Sometimes the Generals tend to drift towards the Control as he acquired more and more stocks while
the stock prices were either not moving or moving at a fairly slow pace, so that he could accumulate
more and more shares over a period of sometimes 2 years (remaining patient all the while even when
the market did nothing to the price of the stock) until he had acquired substantial ownership in the
company. At the same time, he was keen to see that the earnings of the company are increasing in the
books.

The way conservative and conventional approaches have been defined and differentiated with real-
life examples are worth noting.

True conservatism results from a careful analysis, hypothesis and sound reasoning.

The impact of the Ben Graham version of value investing is quite significant in the early career of
Buffett before he started looking at the Growth Stocks as a result of the combined impact of Phil
Fisher's & Charlie Munger's philophies.

To supplement the Partnership Letters, study after that the The Ground Rules that is the gist of the
partnership letters and a commentary to better understand the tenets.

Following that, the worked out example could be the partnership agreements of two companies: viz.
The Pabrai Funds and the Aqua Marine Funds (Guy Spier).

Prof Sanjay Bakshi recommends that the study of Buffett Letters is the only source if followed
diligently should make one an intelligent investor. Rest everything is a rehash of what Buffett has to
offer.

A cursory study of the initially letters suggests that Buffett is a Bear and not a Bull. He prefers to buy
shares in a down market and patienly waits till the stock realizes its fair value. Although he does not
like to take in the last nickel of the deal. He is satisfied with a margin that falls somewhere between the
purchase price and the fair value and loves to book profits in that region.

There are some repeated themes within the entire set of partnership letters. Locating those themes and
integrating them in your investment psychology will pay great dividends in the longer run.

When I look at the method employed for capital allocation by Buffett, it reminds me of the approach
taken by Dr Vijay Malik and Ekansh Mittal. Mittal specializes in two forms out of three viz. Bargain
stocks (undervalued stocks) and special situation investing. Joel Greenblatt has written a wonderful
book on the same "You can be stock market genius".

One way to follow into the footsteps of Buffett is to follow Dr Vijay Malik's portfolio and load a few
positions in the multiples of thousands. This is in line with what Mohnish Pabrai suggested when he
addressed a group of students at the BFBV course MDI Gurgaon wherein he answered to a question
that the best way to pick stocks is to follow the one who is already doing it successfully i.e. cloning the
master. He himself has modeled his hedge fund, Pabrai Funds along the lines of Buffett Partnership
Limited [BPL]. Over a period of time if you continute to supplement your learnings with the words of
the masters in various disciplines, you are liable to acquire the same degree of wisdom as knowledge
compounds in much the same way as the money compounds.

Ekansh Mittal's specializes in Special Situations aka Spin-offs aka work-outs. In addition to providing
recommendations, he also shares the research reports and that makes it a good learning experience.

In case of Dr. Malik, he shares the positions in his portfolio and leaves upto the reader to ascertain what
led to the buying of that position by Dr. Stock. After going through the course and understanding his
Excel template it should be a good exercise to findout the reasons of his recommendations. Dr. Malik
sounds honest with his admission of failing with the technical analysis and how his learning curve has
evolved over a period of time as a result of suffering losses with technical analysis and making
consistent profits out of fundamental analysis.

To get the maximum out of Buffett letters is to go through the entire set slowly while taking
notes/underling/marking the oft repeated quotes and then see if the market actually follows in the ways
he has suggested.

The greatest challenge is not to understand what he says but rather to ingrain those principles and
practices a part of one's reasoning process on a constant basis so as to think exactly like him. Guy Spier
[The education of a value investor] proposes a very good question everytime one is confused about
taking an investment decision and that is "What would Buffett do if he were in my place?"

Since I have studies the method of Dr Malik to analyze a stock, I find it prudent to use his
checklists and run a screener to comeup with a list of stocks to watch out for. After listing
the candidates, I will watch the stocks for a couple of months and see how the selection
works.

Secondly, Phil Town metrics should also be tested on the same lines.