Little-Known Facts About Warren Buffett

 | May 01, 2013 | 2:00 PM EDT  | Comments
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This commentary originally appeared at 10:45 a.m. EDT on May 1 on Real Money Pro -- for access to all of legendary hedge fund manager Doug Kass's strategies and commentaries, click here.

"Weight counts eventually. But votes count in the short term. And it's a very undemocratic way of voting. Unfortunately, they have no literacy tests in terms of voting qualifications, as you've all learned."

-- Warren Buffett

Today I continue my pilgrimage to Warren Buffett's Omaha with a list of things you probably don't know about Warren Buffett, his investment cabal of Ben Graham et al. and Berkshire Hathaway (BRK.A/BRK.B).

As I previously mentioned, my research over the last month has been comprehensive, and I have learned a lot of things that surprised me.

Berkshire and Buffett have been under a microscope for years but here are a few little known facts.

  • The first stock Warren Buffett purchased was in 1942 -- he was 12 years old. The stock was Cities Service -- he purchased three shares at $38 a share. It immediately fell, and he sold it for $40 a share. He learned three lessons: be patient, don't fixate on price and don't be responsible for others.
  • His first crush was on an eighth grader, Dorothy Hume.
  • In Warren's Stable-Boy Selections horse racing tip sheet (distributed at Ak-Sar-Ben Racetrack, Nebraska spelled backwards), he favored speed over class.
  • Warren learned ping-pong at the University of Pennsylvania.
  • He called the city of Philadelphia "Filthy-delphia."
  • When he left the University of Pennsylvania, he called himself "Ex-Wharton Buffett."
  • Ben Graham was born with the name Benjamin Grossbaum.
  • Ben Grossbaum's family lost most of their wealth when he was 9 years old in the market panic of 1907.
  • Ben Graham started as a runner on Wall Street.
  • Ben Graham's partnership was originally funded by the Rosenwald family.
  • Howard Buffett's middle name is Graham.
  • Ben Graham was a philanderer. He once proposed to live half the year with his mistress, Marie Louise Amingues ("Malou"), and half with his wife, Estey.
  • Ben Graham was initially rejected from Columbia Business School. Graham believed that the rejection occurred because of a "secret deformity" that he thought the school had discoved: "For years I had been struggling against something the French call 'mauvaise habitudes'" (bad habits, a euphemism for masturbation).
  • Buffett Associates was funded by seven people, including Warren Buffett. The investments were between $5,000 and $35,000, but Warren only contributed $100!
  • Larry Tisch sent Warren Buffett a check for $35,000 to invest in his partnership but incorrectly made the check out to Charlie Munger.
  • Carol Loomis's husband was a stock broker. In Loomis's first reference to Buffett in Fortune Magazine, she incorrectly spelled Warren's last name.
  • In 1968, Buffett tried to buy Variety. He failed and purchased the Omaha Sun newspaper instead.
  • The year I was born, in 1949, Warren Buffett worked at J.C. Penney (JCP) as a salesman.
  • He went on Vornado's (VNO) Board of Directors in 1973.
  • Buffett's relationship with Salomon's John Gutfreund was solidified when the firm underwrote a Geico convertible offering.
  • Berkshire spent $46 million for the first 48% of Geico and $2.3 billion for the next 52%.
  • Leo Goodwin, Jr., the son of Geico's cofounders, sold his Geico stock at the bottom and died penniless.
  • Warren admired Walter Annenberg and likely got some of his protective moat theory from his lessons on "essentiality." (Annenberg: "There are three properties in the world that have the quality of 'essentiality.' They are the Daily News, the TV Guide and The Wall Street Journal. And I own two out of three." (Note: My has the world changed, as protective moats sometimes dry up!)
  • Walter Annenberg's father, Moe, had mob connections. He was sent to prison for tax evasion and running a telegraph wire with horse race results to bookies around the country.
  • Were it not for a glitch in the contract, Berkshire would have purchased Long-Term Capital Management's assets. (Goldman incorrectly wrote that Berkshire was to buy the management company at LTC.)
  • Meriwether's Long-Term Capital Management hedge fund was shorting Berkshire stock as a hedge against an overvalued market before it got into trouble.
  • Problems arose when Long-Term Capital Management had only $4.7 billion in capital to support $129 billion in assets.
  • I loved this Buffett quote aimed at Long-Term Capital Management's derivatives portfolio. "Derivatives are like sex. It's not who we're sleeping with, it's who they're sleeping with that's the problem."
  • Coca-Cola's (KO) Ivester resigned his role as CEO -- he wasn't fired. (Herb Allen and Warren Buffett lacked the authority to fire him.)
  • Warren Buffett grew a beard after surgery on his colon.
  • Bill Gates and Warren Buffett were ushers at Kaye Graham's funeral.
  • Warren Buffett said he has made the most money in his career "by sitting on my ass."
  • As Coca-Cola's stock fell and technology stocks lifted, a Barron's cover story on Buffett/Berkshire, "What's Wrong, Warren?" was critical, but Warren didn't respond to them. (Boy, was Barron's wrong, as very soon after the Internet got unplugged: 112,000 dotcom employees were fired. Amazon's (AMZN) Bezos was name "Person of the Year" by Time, and Amazon's share price subsequently fell from $113 a share to $17 a share.)
  • At the Sun Valley Conference in 2001 Warren exhibited a slide that depicted and underscored the inevitability of the Internet stock boom of the late-1990s. ("Anything that can't go on forever will end," Herb Stein.)
  • Jimmy Buffett and Warren Buffett are not related!

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