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The Deals of Warren Buffett

The Deals of Warren Buffett

Glen Arnold
2017
T4 242 pages · about 4h 2m to read OL19729547Wgoodreads

Summary

Arnold, a British finance academic, examines Buffett's investments individually in chronological order, reconstructing the numbers, the reasoning and the outcome for each. The series runs across several volumes covering successive periods of the career.

The method is what distinguishes it. Rather than restating Buffett's principles, Arnold works through the actual transactions: the early partnership investments including Sanborn Map, Dempster Mill and American Express; the Berkshire textile purchase and why it was a mistake Buffett has acknowledged; See's Candies, which changed his approach by demonstrating what a business with pricing power and low reinvestment requirement is worth; the newspaper investments; GEICO; the insurance operations and the float they generated; and the later large positions.

For each he presents the financial position at the time, the price paid, the reasoning available from the letters and other sources, and the return realised, which allows a reader to see how the criteria were actually applied rather than how they are described.

The most instructive material is the evolution: Arnold shows the shift from Graham-style statistical bargains to paying up for business quality, and dates it to the Munger influence and specifically to See's.

Arnold is an academic writing from public sources rather than from access, so the reasoning attributed to Buffett is reconstructed. The reference has not verified all the specific figures. It is nonetheless one of the few Buffett books that works from transactions rather than from maxims.

Key takeaways 7

  1. Buffett's early investments were Graham-style statistical bargains, and the shift to paying for business quality is datable to See's Candies and the Munger influence.
  2. See's demonstrated what a business with pricing power and low reinvestment requirements is worth, which changed the criteria applied afterwards.
  3. The Berkshire textile purchase was a mistake Buffett has acknowledged, and the company's name is the residue of it.
  4. Insurance float provided capital at negative cost when underwriting was disciplined, which is the structural foundation of everything built afterwards.
  5. Working through the actual transactions shows how the criteria were applied, which differs from how they are described in the letters.
  6. Several early positions were activist in character, involving pressure on management, which is not part of the later public account.
  7. The reasoning is reconstructed from public sources rather than from access, and the reference has not verified all specific figures.

Who should read it

Investors who want Buffett's criteria examined through actual transactions and their outcomes rather than through restated principles.

Where it sits in the reference 2

Companies
Styles

Who recommended it 1 · 1 direct

Bookshelf

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