In the summers of 2007 and 2008—when talking about oil at $150 per barrel was a real thing—Warren Buffett sunk $7 billion from Berkshire’s Omaha Treasury into Houston’s Conoco Phillips, the third largest American integrated oil company at the time. It was, at the time, the largest amount of money that Warren Buffett had sunk into a publicly traded business. Those large $10+ billion stakes in American Express and Coca-Cola are largely the result of capital appreciation, with Buffett only sinking $1.28 billion into American Express and $1.29 billion into Coca-Cola, respectively. Buffett’s commitment to Wells Fargo ($11.8 billion of Berkshire’s money invested) and to IBM (at least $11.6 billion and counting of Berkshire’s money invested) have been larger investments in recent times, and full-business acquisitions like Heinz and Gen Re also consumed more of Berkshire’s cash than the Conoco investment.
An upcoming change to the blog: In light of a recent conversation, I finally came to my senses and realized that I need to focus on what the true earnings power of the companies I discuss happen to be rather than focusing on the GAAP numbers which can use pension adjustments, currency headwinds, one-time expenses, and depreciation/growth capital expenditures to massage the numbers that are widely circulated to investors. The problem is this—I want to look at numbers that are as untainted as possible so that I can see what a business is really doing rather than merely discussing the gilded lilly that is presented to investors.