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, … Read the rest of this article!

Goldman Sachs’ Partnership Structure Inside A Public Corporation

It was recently reported that Goldman Sachs is taking measures to reduce the number of new partners for its 2020 class. The issue is that Godman’s profit pool, which was $400 million and divided among 220 partners in 2000, is now a little over $500 million and is divided among 550 partners. The consequence is that each partner at Goldman Sachs earns on average of $910,000 per year today compared to $1.80 million in 2000 (and the 2000 figures are in nominal dollars–not adjusted for inflation–so the difference is even more stark. 

When the conservation about Goldman Sachs’ partnership structure comes up, many remark upon how even today’s lower figure remains extremely high compared to average executive profit-sharing in the United States and that no one wants to hear high-earners complain about how their profits “ain’t what it used to be.” True points, but low-hanging fruit.

A broader point that … Read the rest of this article!