Warren Buffett’s IBM Investment Through A British Lens

In November 2011, Warren Buffett revealed that he purchased $10.7 billion worth of IBM common stock to add to the ballast of publicly traded investments in the portfolio of Berkshire Hathaway. He has added to the IBM positions in the five years since the bulk of the initial investment, but the average price was $169 (this amount is constantly subject to revision as Buffett adds to the position).

People who are stirred by changes in stock price are well aware that shares of IBM have fallen to $122 from $169, and those who study the fundamentals of the business are well aware that this stock price fall can be tied to falling revenues. IBM generated $106 billion in revenues back in 2011, and only generated a little over $80 billion in revenues by the end of 2015. IBM’s ability to grow revenues has been an issue since the early 1980s, and decided to begin executing a strategy of permanent stock buybacks in 1993 to offset some of these fluctuations.

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Warren Buffett’s Spending In His 20s

Nestled away on page 204 of Alice Schroeder’s excellent biography of Warren Buffett is the following passage: “[Buffett] had chosen an inviting gray two-story Tudor with picturesque half-beams, a big stone chimney, and a cathedral ceiling. Even the decision to rent a home had been unconventional; owning a home was the quintessence of what most young Americans aspired to in the mid-1950s. The hopelessness of the Depression and the dreary wartime days of making do were fading into memory. Americans stocked their new houses with all the exciting new features and appliances that were suddenly available: washer-dryers, freezers, dishwashers, electric mixers. The Buffetts had plenty of money to buy all these things. But Warren had other plans for his capital, so they rented. And the house they were renting, while attractive, was just barely big enough for them. Howie at two would have to sleep in a largish closet.”

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