The Complete Financial History of Berkshire Hathaway
A Chronological Analysis of Warren Buffett and Charlie Mungers Conglomerate Masterpiece
Adam J. Mead
Contents
For Shelly, Abigail, and Julia
Dedicated to teachers and lifelong learners
About this ebook edition
The hardcover edition of this book includes large data tables. These tables cannot be displayed legibly in ebook format and so they have been removed and placed on brkbook.com, where you are welcome to download a PDF version of these tables.
About the author
Adam J. Mead is a lifelong student of business and capital allocation.
He is the CEO and Chief Investment Officer of Mead Capital Management, LLC, a New Hampshire-based Registered Investment Advisor he founded in 2014.
Adam spent over a decade in banking in commercial credit, including observing first-hand the after-effects of the Great Recession and the long credit expansion afterward.
Adam has been investing in public securities markets since 2004. He owned two small businesses (non-financial) during college, and grew up in a family of small business owners. In addition to managing assets for his clients at Mead Capital, he is involved with numerous local non-profit organizations.
Adam holds a Master of Business Administration from Southern New Hampshire University, from which he graduated Summa Cum Laude in 2013. Previously he graduated Summa Cum Laude from Southern New Hampshire University in 2008 with an undergraduate degree in Business Studies and a Minor in Economics.
A native of Derry, NH for his entire adult lifetime, Adam lives in Derry with his wife Shelly, their two daughters, and their two dogs.
Acknowledgments
This book could not have happened without much help, support, encouragement, and luck. First and foremost, I thank Warren Buffett and Charlie Munger, whose business creation is topped only by their genuine skill and passion for teaching. Im grateful for the many founders, managers, and employees who carefully built each part of Berkshire into what it is today, and for those who will continue its legacy.
Im lucky to follow in the footsteps of some incredible Berkshire scholars. Not least among them is Lawrence Cunningham, who went above and beyond to find me financial filings at the Library of Congress, in addition to reading an early draft of the manuscript. The staff at the Boston Public Library were incredibly helpful in researching Berkshires early history. A special thank you to Todd Wheeler for lending me his signed copy of Phil Beuths Limping on Water and recounting the story of his career at Capital Cities/ABCthese provided invaluable insights into the management philosophy of Tom Murphy and Dan Burke. Thank you to Carol Loomis for her early help with this project.
My good friends Andrew Wagner and Carter Johnson provided ideas, support, and guidance throughout the process of crafting Berkshires history. Im thankful for Guy Spiers friendship and supportand his reminder of just how special Berkshires culture is. Chris Bloomstran provided invaluable suggestions and helped me find the right voice to convey Berkshires long history. Jonathan Brandt suggested improvements to key parts of the manuscript. Marcy, Margaret, and Sarah Hawley, along with John Baskin, provided great ideas and helped me better understand the world of publishing. Jessie Rancourt enthusiastically read a draft of the manuscript and provided excellent feedback. Jeff Annellos detailed critique not only made the book better but helped me clarify its intended audience. Gautam Baid shared his experience writing and publishing The Joys of Compounding and encouraged me to paint my own canvas. Im also thankful for Ron Lazaros encouragement and keen eye on a later draft of the manuscript.
I wouldnt have found my new friends at Harriman House without Dan Pecaut and Austin Pierce. Craig Pearce at Harriman was a joy to work with and shared my enthusiasm for bringing the full story of Berkshire Hathaway to life in a first-class way. Chris Parker created a beautiful cover that conveys the feeling of Berkshire in one concise snapshot. The care and devotion of the typesetting work done by Chris Wild shows on every page.
Eric Wing and Leakana Ly at MetroCreate crafted a beautiful companion website at theoraclesclassroom.com. They found ways to bring my particular and exacting ideas to life, which I know wasnt easy.
My editor, Erika Alison Cohen, became a trusted partner and friend along this long journey. Her work can only be fully appreciated next to the raw material I provided her. She proved not only an excellent editor but a patient teacher as well.
Two individuals not directly related to this project deserve attention for their contributions. The first is my high school welding instructor at Pinkerton Academy, Mr. Copp. He taught his students that a weld could be the best and strongest in the world, but if it looked sloppy no one would fully appreciate it. Ive used that lesson as a metaphor in every walk of life since leaving his class. I must also thank Gary Vaynerchuk. He doesnt know it yet, but his message of pursuing ones passions with empathy and energy, no matter how small the audience, kept me going to the finish line.
Finally, and most important of all, I thank my wife Shelly. Im incredibly lucky to have a loving partner who supports my endeavors, even ones that turn out bigger and much longer than originally envisioned. No project of this magnitude could be completed without a trusted companion by ones side to keep the rest of the world in order while pouring heart and soul onto the page.
For all this help, many mistakes and omissions undoubtedly remain. To someone now accustomed to the world of electronic media, a printed book preserving these faults in time is a terrifying prospect. They are mine alone.
Foreword by Christopher Bloomstran
The Library of Congress contains more than 200 volumes devoted to Berkshire Hathaway and the two gentlemen adorning the cover of this book. Add in newspaper and magazine articles, research reports, investment letters, social media messages, and Berkshires own financial reporting and archives of its annual meetings, and it is safe to conclude that more has been written on the company and the two men running it than on any other business over the past three decades, perhaps over all time. The question must therefore be asked, Why another book?
I know I speak for countless others when I say Warren Buffett and Charlie Munger are my mentorsnot in the classic sense, but for having had such a profoundly positive impact on my life as an investor and as a citizen.
Its hard to believe for the quarter-century following 1965, when Mr. Buffett bought control of Berkshire Hathaway, that he and the company were genuinely flying under the radar. Despite having compounded Berkshires book value per share at 24% and its shares by 28% annually, against only a 10% return for the Standard & Poors 500 index, Berkshire, Buffett, and Munger were not household names in the late 1980s and early 1990s. Today, of course, Messrs. Buffett and Munger are world-wide rock stars and Berkshire Hathaway is no longer just a company but a cult. Back then, I never heard those names uttered when I studied finance. Outside of the MBA program at Columbia University and a handful of schools with oddball professors, early Berkshire cultists to be sure, these three didnt exist on campuses. Following school, I worked at a large midwestern bank in trust investments. We didnt own or even follow Berkshire. To the old guard it was regarded as, just an insurance company thats really no more than a leveraged mutual fund. When I studied for the CFA designation in the early 1990s, I only first learned of Berkshire when reading about the efficient market hypothesis and a highly regarded finance academician pointing to the company and to Mr. Buffett as aberrant, lucky anomalies.
