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|by Andrew Kilpatrick (India 196567)
AKPE (Andy Kilpatrick Publishing Empire) Publishing
1162 pages (Monster Millennium Edition)
4th edition 2000
Reviewed by John Hartley (Grenada 199294)
|THE PROFITS OF WARREN BUFFETs Berkshire Hathaway, Inc. (BRKa on the New York Stock Exchange) plummeted 42% in 1999, the worst year in its history, so the title Of Permanent Value may be a stretch even though for 35 years BRKa has performed nothing less than sensationally.
Warren Buffett has subscribed to a very simple hypothesis that is “know how to invest the available capital to achieve the best long term results for shareholders.” This is not a very complicated formula coming from a complicated man who has shunned the glitzy CEO fraternity that visualizes themselves as celebrity. For most of his long life, the reclusive Mr. Buffett has had the best ringside seat in the business world. Long ago recognized for his analytical skills, he has continued to amaze the world with a stock that has climbed from $19/share to its present $62,100. Okay, it’s down from its all time high of $78,600, but the average gain over 40 years has been at 24% compounded annually. With a personal stake of 474, 998 shares, his holdings are worth $29.5 billion. Not bad for the kid from Omaha who lives in the same house he grew up in, draws a salary of $100K per year and lives very frugally except for a private jet. Katherine Graham of the Washington Post once said upon visiting his home in Omaha, Warren, is this all you can afford? Throw into the mix Astrid, his French waitress mistress, allegedly recruited by his wife, Susie. Gift cards from the Buffetts are signed Warren, Susie, and Astrid.
The author of Of Permanent Value, Andrew Kilpatrick, weaves a path through time that delineates transactions in painstaking detail that even astute investors such as this reviewer cannot understand. Each of Warren Buffets acquisitions has been carefully calculated and, in retrospect, has been brilliant. Kilpatrick brings us the blueprint that Buffett put to use with uncommon brilliance yet incredibly obvious results.
In the early days, Nebraskans invested in BRKa through word-of-mouth and with very attractive terms. Omaha is now loaded with millionaires who owe their success and financial security to Buffett. Had an investor taken Buffetts advice and invested $10,000 in Berkshire Hathaway in 1965, she/he would be worth $50 million today. Conversely, the same $10K in an S & P index would be worth $500,000.
Author Kilpatrick has detailed most of the transactions up to 1996 when his book was originally published. Since that time Buffett has continued to overwhelm even the most casual business observer. His stock has shot-up from $38,000 per share in 1996 to its present $62,100 per share.
From the beginning, Buffett made his fortune from investing. Between 1950 and 1956, he saw his seed money grow from $9,800 to $140,000. In 1959 his net worth was $400K, in 1982 $250 million, in 1984 $750 million, and today its $29.5 billion.
Kilpatrick provides many interesting insights into Mr. Buffett, and does a good job of capturing the readers interest in this extraordinary man. though 1162 pages are a bit much. Some of the Buffett deals are described in excruciating detail that would be over the heads of many readers. At one point, the author describes the will of Howard Buffett and how his son, Warren, was left out of it. All of a sudden we are introduced (albeit briefly) to Matt Seto, a teenage investor who is quoted by Kilpatrick as saying, So many wealthy people you read about started out wealthy, Buffett didnt. Kilpatrick also provided a picture of Seta which leads me to the conclusion that the only justification for this is that Seto is a customer of Kilpatricks?
In spite of the length of the biography, and finding out much more than we really care to know about his business deals, Warren Buffett is a very interesting character.
|John Hartley has been manager of the Peace Corps Los Angeles regional office since March, 1996. John, a native of Colorado, and his wife Katha were volunteers in Grenada from 1992 to 1994.