Banking & Finance

Warren Buffett's Greatest Investments Of All Time

9. Moody’s: (NYSE: MCO)

> First Shares Purchased: n/a

> Date Sold: several transactions

> Amount Made: n/a

> % Gain: n/a

Buffett purchased 488 million shares of Moody’s at a cost basis of $499 million. Buffett’s initial holdings in Moody’s were only 15% of outstanding shares. According to Berkshire Hathaway’s 2008 report, shareholder buybacks from the ratings agency had increased the portion of the shares to 20% of the company’s total. At the end of 2006, the market value of Buffett’s shares was $3.3 billion. His most recent holdings showed a reduction in holdings, 28.87+ million shares, down from 30.783 million. Despite the losses, it is plain the Moody’s deal has still been lucrative for Buffett. Even if the value of his original position had been halved since 2007, which is unlikely, Buffett’s realized and unrealized gains would be $351 million and roughly a 70% increase.

10. Freddie Mac

> First Shares Purchased: undetermined

> Date Sold: 2000 (the vast majority)

> Amount Made: $2.5 Billion (Realized)

> % Gain: 850% (Realized)

At the end of 1999 Buffett had 59,559,300 shares of Freddie Mac with a cost basis of $294 million and a market value of $2.8 billion. Buffett sold nearly all of his Freddie Mac and Fannie Mae shares in 2000. It may have been his insight into the company that gave the investor premonitions that Freddie Mac and its sister, Fannie Mae, were doomed. Buffett’s earnings on the sale were realized gains of roughly $2.5 Billion, with about an 850% increase from purchase price.


> First Shares Purchased: 1970’s

> Date Sold: Still Owned

> Amount Made: $2.35 billion (Unrealized)

> % Gain: roughly 5000% (Unrealized)

GEICO is one of Buffett’s first major investments and the position may have ties to his hero and mentor Benjamin Graham. Buffett began buying GEICO in the 1970’s and continued acquiring shares through 1981 with a carrying cost of $45.7 million for a 30% stake.  Because of buybacks, his stake grew to some 51%.  Team Buffett decided to acquire the rest of the company for $2.3 billion in 1995 and the deal closed in the first hours of 1996. That valued the company at closing at $4.7 billion for GEICO as a whole, placing Buffett’s implied cost basis around $2.35 billion. Buffett proudly noted in Berkshire’s 2009 report that GEICO’s market share has increased from 2.5% to 8.1% since the deal and he noted that “its float has grown from $2.7 billion to $9.6 billion.”  What GEICO would sell for today would likely be up for debate.  What would be extremely hard to debate is that Buffett added billions of dollars in value to GEICO under the Berkshire umbrella.

12. Capital Cities / ABC and Disney (NYSE: DIS)

> First Shares Purchased: 1979

> Date Sold: 1996

> Amount Made: $2.2 Billion (Realized and Unrealized)

> % Gain: n/a

Buffett purchased 20 million shares of Capital Cities/ABC at a cost basis of $345 million. At the end of 1995 the unrealized gains on those holdings were worth $2.5 billion. As reported in the Berkshire Hathaway Annual Report at the end of that year: “On January 4, 1996, shareholders of Capital Cities/ABC, Inc. … and The Walt Disney Company … approved an agreement and plan of merger by and between Disney and Capital Cities. In March 1996, Berkshire received about 21 million shares of Disney common stock and $1.2 billion in cash in exchange for the common shares of Capital Cities.” Berkshire reported a total realized and unrealized gain, between the shares and the cash, of $2.2 billion.

13. Lastly, Buffett’s House

> First Purchased: 1957

> Date Sold: Still Owned

> Amount Made: ?

> % Gain: ?

What about Buffett’s personal home?  Mr. Buffett’s house was purchased for  $31,500 back in 1957 and he has lived there ever since. A comparable home sold in his neighborhood in Omaha today would be worth about $400,000. He auctioned his signature 2001 Lincoln Towncar for charity for perhaps five times what a used car would cost if it were owned by any other person. So assuming Buffett imbues a 5x fame multiplier into his home, his six-bedroom stucco house could sell today for as much as $2 million. This is a profit of $1.96 million, and a gain of 6,249%.  Who knows how many improvements have been made that would adjust his cost basis higher.  Even after inflation adjustments, Buffett’s home would end up being one of his greatest percentage gains with his own money.

-Michael B. Sauter, Jon Ogg

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