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Clay is joined by Jacob McDonough to discuss Berkshire’s Beginnings. In this episode, you’ll learn how Buffett was able to turn the business around and make its way to eventually becoming worth nearly $800 billion in 2023.
Jacob is the author of the book Capital Allocation, which covers the financials of Berkshire Hathaway from 1955 through 1985, and he’s the host of the 10-K podcast, where he dives into the annual reports of various companies from decades ago, such as Geico and GM.
▶️ RELATED EPISODES:
- What Is The REAL Intrinsic Value Of Berkshire Hathaway? w/ Chris Bloomstran: [ Ссылка ]
- Berkshire Hathaway Annual Shareholders Meeting 2023: [ Ссылка ]
- Charlie Munger & The Psychology of Human Misjudgment: [ Ссылка ]
- Mental Models of Warren Buffett & Charlie Munger: [ Ссылка ]
IN THIS EPISODE, YOU’LL LEARN:
0:00:00 - Intro
0:00:28 - Why purchasing Berkshire Hathaway’s stock was one of Buffett’s worst investment decisions.
0:04:54 - How cheap Berkshire’s stock was when Buffett purchased it.
0:07:38 - The initial steps Buffett took to turn Berkshire’s business around.
0:13:26 - Why Buffett’s emphasis on cutting costs was so critical to Berkshire’s early success in the mid-1960s.
0:18:33 - The pivotal moment in 1967 that changed everything for Berkshire Hathaway.
0:21:30 - How National Indemnity’s valuation compared to the textile business.
0:24:54 - How insurance float helped supercharge Berkshire’s growth.
0:29:27 - The advantages Berkshire gained by getting into the insurance industry.
0:36:11 - What got Buffett and Munger into purchasing shares in Blue Chip Stamps.
0:44:47 - Buffett’s unconventional use of debt in expanding operations.
0:47:29 - What fueled the 1970s expansion phase.
0:52:36 - What led Geico’s stock to drop 96% in the 1970s.
0:57:29 - How Warren Buffett and Charlie Munger met.
1:05:40 - The financials and story of one of Berkshire’s best investments ever - See’s Candy.
1:14:07 - How Jacob thinks about different return metrics when analyzing a company.
1:17:26 - Jacob’s biggest takeaways from studying the history of Berkshire Hathaway.
🎧 Listen to our episodes here: [ Ссылка ]
🖊️ Access the transcript and learn more about the guest here: [ Ссылка ]
📖 BOOK MENTIONED:
- Capital Allocation by Jacob McDonough: [ Ссылка ]
Disclosure: Some of the links above are affiliate links that we may earn commission from. This helps keep our show going! 😀
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ABOUT OUR SHOW 🎙
On We Study Billionaires, we interview and study famous financial billionaires including Warren Buffett, Bill Gates, and Ray Dalio. We teach you what we learn and how you can apply their investment strategies in the stock market.
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