Warren Buffett (original) (raw)
Warren Edward Buffett (born August 30, 1930) is a wealthy American investor and businessman.
Nicknamed the "Sage of Omaha", Buffett has amassed a substantial fortune from astute investments through his company Berkshire Hathaway, of which he holds 38%. He is often ranked as the second-richest person on earth after Microsoft chairman Bill Gates.
Buffett customarily invests in undervalued companies with low costs, low p/e ratios, and good growth potential for the long term. Identifying such companies is the difficult part. The actual value generated is more by the companies he owns than stock market investments, although his stock ownership in companies such as Coca Cola and Gillette attracts more attention as does his dismissal of high-tech companies. It should also be noted that his investments have on occasion been less successful.
Buffett also owns insurance companies like Geico and General Re that generate a large free cash flow. These companies are a source of funds that he then allocates to Berkshire Hathaway's subsidiaries and uses to acquire new companies.
Buffett was born in Omaha, Nebraska. His father was a stockbroker and a Congressman. Buffett was educated at the University of Nebraska (transferring there from the Wharton School of Finance and Commerce, University of Pennsylvania) and took a masters in economics at Columbia University, studying under Benjamin Graham. He went on to work for Graham at Graham-Newman where he followed Graham's value investing rules. Buffet returned to Omaha in 1957 and started his own investment partnership, putting in his own money and raising additional investments from friends and family. By 1969 he had returned an average of almost 30% a year, in a market where 7% to 11% is the norm and anything more is outstanding. Under Buffett's direction, Berkshire has outperformed market benchmarks such as the S&P 500 and the Dow Jones Industrial Average for over forty years.
One of his earliest investments was in American Express. Among the companies he invested in was Berkshire Hathaway, a New Bedford textile company. Buffett sold his investment but kept the name and turned the shell of the company into a investment business, notably in the insurance field which generated a steady cash flow for further investment. As of 2003, Berkshire Hathaway owns around forty companies that employ 150,000 people.
He married Susan Thompson in 1952, they separated in 1977 but remain married. She is a significant stock-holder in Berkshire Hathaway and a board member. Buffett lives with Astrid Menks while his wife resides in San Francisco. He has three children.
In terms of his personal life he is famously frugal. Through the Buffett Foundation he makes charitable donations, usually around $12 m a year in total. He has stated his intention to disburse 99% of his wealth after his death to good causes.
His main business aide is Charlie Munger, once a lawyer with Munger, Tolles and Olson and now CEO of Berkshire Hathaway subsidiary Wesco Financial and vice-chairman of Berkshire Hathaway. It is believed he will succeed Buffett along with Geico's CEO Lou Simpson.