Glen Arnold - The Deals of Warren Buffett Volume 3: Making America’s Largest Company

The Deals of Warren Buffett

Volume 3

Making Americas largest company

Glen Arnold

The Deals of Warren Buffett, Volume 1, The First $100m

The Deals of Warren Buffett, Volume 2, The Making of a Billionaire

The Financial Times Guide to Value Investing: How to become a disciplined investor

The Financial Times Handbook of Corporate Finance

The Financial Times Guide to Investing: The Definitive Companion to Investment and the Financial Markets

The Great Investors: Lessons on Investing from Master Traders

The Financial Times Guide to Banking

Modern Financial Markets & Institutions: A Practical Perspective

Corporate Financial Management

Essentials of Corporate Financial Management

The Financial Times Guide to Financial Markets

The Financial Times Guide to Bond and Money Markets

Get Started in Shares: Trading for the First Time Investor

What works in investing?

That was the question Glen Arnold sought to answer in his tenure as professor of investing; drawing on academic insights, great investors ideas and his own experiences to teach value investing techniques to students and to fund managers new and old.

Along the way, Glen authored the UKs bestselling investment book (The Financial Times Guide to Investing) and bestselling UK corporate finance textbook (Corporate Financial Management), alongside titles on value investing (The Financial Times Guide to Value Investing) and investment trailblazers (The Great Investors).

2013 saw Glen start a new chapter. Swapping his professorship for the real-world rigours of active fund management, Glen would test his ability to outperform the stock market by investing his own money using the lessons hed learned during his academic career. In doing so, Glen would offer full public disclosure of his buy and sell decisions online in a newsletter to followers, sharing each success and struggle along his investment journey.

Glens new fund management adventure saw him become a Berkshire Hathaway shareholder and attend many annual general meetings in Omaha.

Elsewhere in the audience and unbeknown to Glen was Tom Spain; another UK Buffett enthusiast building his own reputation for fund management by adopting Buffett and Mungers investment philosophies for his firm, Henry Spain. When several of their other investment choices overlapped, Glen and Tom found themselves attending the same annual general meetings, where they grilled directors with polite but penetrating questions that other shareholders rarely matched.

After eight years investing only his own money and that of his wife, Lesley, Glen was satisfied that he had proven his ability to outperform the stock market by applying the tested value investment techniques hed taught for many years.

In 2021, Glen joined Henry Spain Investments to run an open fund focused on neglected, unloved and under-priced UK shares.

To find out more, go to henryspain.co.uk or glen-arnold-investments.co.uk.

This series of books would not have come about without a great deal of help from others. Firstly, I would like to thank Warren Buffett and Charlie Munger for their willingness to take time to help other investors by writing about and discussing publicly their philosophies and experiences in the adventure of investing. Id also like to thank them for permitting the use of their material in this book, and for stewarding a portion of my savings held in Berkshire Hathaway shares.

Bill Child, who built R.C. Willey (the sixth investment in this book) into a billion-dollar furnishing retailer from a 600 sq. ft store, was very generous in offering to review the chapter written about his creation and its sale to Berkshire. He added some important material to give a richer picture. Thank you, Bill.

Many scholars have written about Berkshire Hathaway, Warren Buffett and Charlie Munger, not least Robert P. Miles, Carol J. Loomis, Adam J. Mead, Alice Schroeder, Roger Lowenstein, Robert G. Hagstrom, Lawrence A. Cunningham and Andrew Kilpatrick. I am grateful for their work, which creates a bedrock of well-researched and reliable sources of information.

Craig Pearce at Harriman House has been a more supportive and patient editor than I deserved (I was about a year late delivering the manuscript). He did a great job of editing the work and enthusing the rest of the team. Tracy Bundey, Charlotte Staley, Lucy Scott, Sally Tickner and Suzanne Tull at Harriman all played assiduous, creative and energetic roles to ensure the success of the book thank you all.

It all began in 2013, when I took the decision to stop other activities to allow full concentration on stock market investing. This meant giving up a tenured professorship, ceasing teaching in the City of London and, ironically, pulling back sharply on wri ting books.

To create a record of the logical process in reaching a decision to select a share, I wrote blogs laying out my analysis on a simple website and made them free to all. It was galvanising to be forced to express clearly and publicly the reasoning behind allocating capital in a particular way. And besides, I needed a way to review, a few months down the line, the rationale for the investments made.

The blog became popular, and then the investment website ADVFN asked if I would transfer it to their newsletter page. I accepted, and one strand of my writing there became a series of articles about the rationale behind the investment deals of Warren Buffett (I didnt always have a potential investee company to analyse and I thought readers might be interested in Buffetts decision making, experiences and lessons). It is from those articles that this book has been created.

You might think that Warren Buffett has been covered in dozens of published volumes and there is nothing new to say. But having read much of this literature myself, I was left unsatisfied. Other writers address what he invested in and how much he made from it. But I wanted to know why. What were the special characteristics of the companies Buffett chose that made them stand out? Was it in the balance sheet numbers, the profit history, the strategic positioning and/or the qualities of management? I wanted to know the detail. How did Buffett go from step to step in rational investing, from having virtually no money to being very rich?

For each investment, this required fresh investigation, tapping many sources. The priority was to focus on the analysis of Buffetts selected companies, which meant very little time spent on his personal life, which has been thoroughly covered elsewhere.

I hope you enjoy reading how Warren Buffett turned Berkshire Hathaway into one of the greatest companies of all time.

Glen Arnold

Summer 2021

Warren Buffett was only just getting into his stride as he approached the normal retirement age. Already a billionaire, he just couldnt stop himself from tap-dancing to work. He loved finding excellent companies at reasonable prices. Delving into what made a company tick was his idea of fun; he had the joy of seeing his analysis proved right tim e and again.

The analytical techniques he used are simple to explain as principles, such as find a good quality franchise run by competent and honest managers, and dont overpay. Stating these principles is one thing; applying them to companies is something else.