Warren Buffett: Biography and Investment Philosophy

Warren Buffett is an American investor and entrepreneur born on August 30, 1930 in Omaha, Nebraska (United States). He is considered the best investor of the 20th and early 21st century. Therefore, he is one of the most popular and is also known for his philanthropic work, having committed to donate more than half of his wealth to the Bill and Melinda Gates Foundation.

Presently, he plays the role of CEO at Berkshire Hathaway, of which he is president and majority shareholder and appears on the Forbes list as the third richest person in the world, with an estimated fortune of 65.6 billion dollars.

Warren Buffett: Biography

Do you want to know about Warren Buffet's early life, how he rose to wealth and his investment philosophy? Proceed on this informative piece as we dive in!

Warren Buffet's Biography

Warren Edward Buffett as said earlier was born on August 30, 1930 as the son of a U.S congressman and businessman Howard Buffett. He developed interest in business during his youth time and he was opportuned to be admitted into Wharton School of the University of Pennyslavania in 1947 before graduating from the University of Pennsylvania at the age of 19.

He went on ti graduate from the Columbia Business School after been denied at the Harvard Business School. From here, he molded his investment philosophy around the concept of value investing pioneered by Benjamin Graham.

He also attend the New York Institute of Finance to focus on his economic background and pursue a business career.

From his strategic business and investment plan, he rose to become an American business magnate, investor and philanthropist. He's currently the chairman and CEO of Berkshire Hathaway.

As of November, 2023. Warren Buffett us $120.9billion dollar rich, making him the seventh-richest person in the world. He's 93 years old.

👉 Learn about other past financial giants like J.P Morgan.

Investment Philosophy

Warren Buffett, is known among other nicknames as the ”Oracle of Omaha'‘. He is characterized by his austere lifestyle, charging a much lower salary compared to most executives of his level and importance. He's still living in the same house he acquired in 1958.

In terms of his investment style, Warren Buffett is known for his philosophy of ”value investing” looking for companies whose market price is lower than its intrinsic value. Buffett's idea is to invest in good companies with a long-term view, which present solid and lasting competitive advantages (the so-called ”MOAT”) and which generate good results consistently.

Warren Buffett himself affirms that he only invests in businesses that are simple to analyze and that he himself can understand. In addition, the work of the management team is also essential since he considers that a company must be directed by good professionals.

Despite looking for companies with an attractive and lower price than its target price, Buffett believes that it is better to always invest in a really good company despite being a little expensive and this is summed up in his famous phrase:

It is better to buy a very good company at a mediocre price than a mediocre company at a great price.

Ultimately, Warren Buffett's investment style is based on looking for good companies with competitive advantages in their sector that are sustainable, to hold long-term and collect dividends that allow him to acquire more shares, without diversifying.

One of Warren Buffett's most famous investments that exemplifies his philosophy is his investment in Coca-Cola. He considers it one of the most powerful companies in the market, with a strong brand image and loyal customers, which is essential since it causes, according to Buffett, that consumers never stop consuming Coca-Cola and the business is sustainable in the future.

Berkshire Hathaway

In 1962 Warren Buffett began to acquire shares of the textile company Berkshire Hathaway and in 1965 he took control of the largest share of the company. Although at first Buffett maintained the textile business, from 1967 he expanded the company to the insurance and other investment sectors until he left the textile business and expanded enormously in different sectors, forming a holding through which he has made and concentrated his investments since 1965.

Warren Buffett has mainly earned his fame thanks to his role in Berkshire Hathaway, where he has obtained spectacular results. Between 1965 and 2009 he presented a gain in his shares of 21.4% while the return of the S&P500 during those years was 9.3%, so he has consistently beaten the market most of the years, with results unattainable for the vast majority of investors. During that period of time, the stock of Buffett's company has gone from a book value of 9 dollars to 84,467.

The main companies in which Buffett participates through Berkshire Hathaway are:

  • The Coca-Cola Company
  • Bank of America
  • Apple
  • American Express
  • Chevron

Relevant Facts

Of the main relevant facts of Warren Buffett's investor paper, the following stand out:

  • At 11 years old he acquired his first shares, they were from the Citi es Service company and he sold them with profits before their price skyrocketed, which was his first lesson.
  • In 1950, he enrolled in the Columbia Business School when he found out that Benjamin Graham, one of his greatest influences, was teaching there and later worked for him in 1952. Buffett acknowledges that it is ”15% Fisher and 85% Graham”.
  • In 1956 he founded his own company (Buffett Associates Ltd.) with his own capital and that of his friends and in just 5 years he achieved returns of 251%.
  • In 1965 Buffett acquired the textile Berkshire Hathaway and later used it to unify his businesses and channel his investments.
  • Between the 80s and 90s Buffett acquired Nebraska Furniture Mart and Scott & Feltzer, in addition to making his first investment in Coca-Cola.
  • Warren Buffett meets Charlie Munger, who would become vice president of Berkshire Hathaway and play a fundamental role in the company according to Buffett.
  • On November 3, 2009 Buffett through Berkshire Hathaway acquires the railway company Burlington Northern Santa Fe for 44 billion dollars, which would be the largest purchase of his life.
  • In February 2013 Berkshire Hathaway completes the acquisition of Heinz.

Warren Buffett: The Press editor

He is an insatiable newspaper reader. At thirteen, Buffett distributed the Post on the streets of Washington, where his father was a Republican congressman. Thirty years later, in 1973, he bought shares of the Post and, a year later, was elected counselor, president of the finance committee of the council, and business advisor of Catherine Graham and the legendary editor's son, Donald E. Graham.

His vocation for the world of information has led him to be majority shareholder of Washington Post Company, owner of Newsweek, six television channels, in addition to cable television. He is also the owner of the Buffalo News, which he turned into one of the leaders of the journalistic sector, and the “richest in news” in the United States.

Warren Buffett believes that the relationship between news quota and profits is inexorably linked. Founder and president of Berkshire Hathaway (nyse: BRK.A and BRK.B), the portfolio management company with which he invests. Parent company of companies, which has more than forty subsidiaries, leading companies in various sectors: reinsurance, footwear and commercial aviation, through energy.

Warren Buffett and Business Wire

Buffett recently starred in “the news of the news” with the acquisition of Business Wire, the world leader in corporate news distribution and multimedia services, founded in 1961 by journalist Lorry I. Lockey, who will continue as chairman of the board.

This financial operation of wide resonance in the world of information is a real bombshell for Business Wire and Lockey's management team, led by its president, Cathy Baron, a key figure in this purchase operation between Buffett and Lockey, two giants of the business world.

Warren Buffett has emphasized that Business Wire is a faithful reflection of the profile of profitable pioneering companies in the industry, with considerable growth potential, which make up the Berkshire Hathaway portfolio.

“We quickly realized that Business Wire is a jewel of a company. Our primary criterion in all our investment strategies is the evaluation of the company's management team. The great experience of the Business Wire executives has been decisive in this acquisition” Buffet Said

Warren Buffett: The Investor

Warren Buffett, who considers himself his best advisor and investment counselor, once said: “Wall Street is the only place where those who drive a Rolls Royce seek advice from those who take the subway“.

Behind the Buffett myth, we find an eminently rational man, self-confident, and with a formidable baggage of experience that offers us a recital of financial science and management. He has based his way of investing in “value investing”, acquiring companies that were undervalued, and keeping them over time, thus increasing their patrimony exponentially.

“I only invest in businesses that I understand,” he has declared on numerous occasions, he does not rush and remains in a “crash” or cash position, outside the market, until the opportunity arises.

Buffett looks for companies that have had a proven success, with a competent management team, with a competitive advantage in the market and a consolidated brand image. To acquire this type of companies, he analyzes their financial information very well and looks at their price in relation to historical values. He pays special attention to the “Book Value Per Share” (balance value per share), the ROE (Return On Equity, return on capital) and the level of indebtedness of the company, all fundamental ratios. He tells us that investing requires discipline, patience and knowledge, as well as common sense. In Buffett, the exercise of reason, of the reasonable, is his main currency.

Warren Buffett: The Character

“I really like my life. I have been able to organize it to do what I want”. He was born in Omaha, Nebraska in 1930. Graduated from the University of Nebraska, Master in Economics from Columbia and graduated from the University of Wharton.

Despite his immense wealth, Buffett has lived a simple lifestyle. He drives his own car, still living in the same Omaha house, which he bought fifty years ago for $31,500. His salary is $100,000 a year, the lowest paid CEO among the Fortune 500 in the country. He himself does his tax return, the only billionaire who takes care of this return.

Warren Buffett: The Manager

Although he is better known as an investor, Buffett is also a talented manager. He adopts the simple and avoids the complicated. He has not read the codes of good governance of Olivencia and Aldama nor the project of the so-called “Conthe Code.” But Buffett has very clear his “code of good governance and transparency” of Berkshire Hathaway.

He demands from his managers that they take very seriously the responsibility of informing shareholders in depth and in a clear and sincere manner.

Transparency does not consist of managers of some listed companies flooding shareholders with massive amounts of paper-couché information and documentation, which in some cases seem pure promotional campaigns while those same companies seem reluctant, behind the scenes, to provide all shareholders, analysts and media with the same relevant information that allows them to know the substance of the business in question.

Warren Buffett considers the shareholders of Berkshire Hataway as owners: he informs them of everything he would like to be informed if he were in their place.

“Hire well and manage little”. Buffett expects his managers to behave as if they were owners of the company, in order not to lose sight of their main objective, which is to increase the value of the shares.

Buffett acquires companies and maintains their executive teams, unusual in today's world. He selects people in whom he trusts and allows them to continue running their businesses exactly as they did before acquiring them. “When evaluating people – he affirms – I look for three qualities above all: integrity, intelligence and energy. If you don't have the first, the other two won't do you any good.”

His theory and practice consist of surrounding himself with the best; his managers constitute a fascinating group of entrepreneurs.

Most large companies dispense with their managers, even the most brilliant, when they reach 65 years of age. However, Buffett's can stay in their positions, according to him, “until they are a hundred years old, and then they can retire”.

In German, making money is called “verdienen”, which could be translated as “deserve it”, “get it with your own effort”. Americans “do it” (make money). In view of this sketch, it seems that our man has been very clear about how to deserve his good fortune. “If you tell me who your heroes are, I'll tell you how you'll do in life”.

Warren Buffett's method

  1. Business Principles – Is the business simple and understandable? – Does it have a coherent operating history? – Does it have favorable long-term prospects?
  2. Management Principles – Is the management rational? – Is it honest with shareholders? – Does it resist the institutional imperative?
  3. Financial Principles – What is the return on capital? – What are the “owner benefits” of the company? – What are the profit margins? – Has the company created at least one dollar of market value for every dollar retained?
  4. Valuation Principles – What is the value of the company? – Can it be acquired at a appreciable discount to its value?

Concluding, Warren Buffett, often referred to as the “Oracle of Omaha,” is unquestionably one of the world's best investors, known for his prudent and long-term approach to the stock market. His investment philosophy, centered on buying companies with solid fundamentals at reasonable prices, has been an inspiration to many, including renowned investors like George Soros and Mark Minervini.

While Soros is famous for his aggressive hedge fund investment strategy and notable success in the forex market, Minervini stands out for his technical approach and ability to identify trending stocks before they make significant gains. These three titans of investment, each with their unique style, have left an indelible mark on the world of finance, demonstrating that there are multiple paths to success in the realm of investing.

FAQs about Warren Buffet

What is Warren Buffett known for?

He's known as the ‘Oracle of Omaha' and an American business conglomerate and philanthropist who has devoted his lifetime into value investment. He's globally known as a success investor with great personal fortune currently ranking him as the seventh-richest man in the worls.

What is Warren Buffett primary investment vehicle?

Buffet acquired the Berkshire Hathaway Inc. textile manufacturing company in 1965 and has since then use the corporation to publicly trade shares in other companies to yield returns.

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