Berkshire Annual Letter 2000 (Part 1)
In the introduction of this letter, Warren Buffett mentions that most of his stock holdings were fully priced and the long term prospect for equities in general was far from exciting.
Year 1999 was the year technology stocks outperformed the rest of the market, but they are not something that Warren Buffett will buy.
But I will tell you now that we have embrace the 21st century by entering such cutting-edge industries as brick, carpet, insulation and paint. Try to control your excitment.
Instead, these were the acquisitions made by Warren Buffett in that year:
MidAmerican Energy – A utility company.
CORT Business Services – A national leader in “rent-to-rent” furniture.
U.S. Liability – Medium sized insurer of unusual risks.
Ben Bridge Jeweler – A purchase made by phone, this was a 65-store West Coast retailer selling jewellery.
Justin Industries – Leading maker of Western boots and the premier producer of Brick in Texas and five neighboring states.
Shaw Industries – The world’s biggest carpet manufacturer.
Benjamin Moore Paint – Paint producer for 117 years.
Johns Manville Corp – Manufacturer of asbestos products. Nation’s leading producer of commercial and industrial insulation, roofing systems and a variety of engineered products.
One trait you can find in common is that a majority of them are market leaders dealing in a simple product or service.
Warren Buffett likes to buy a company with a owner that loves his company and is concerned about the direction of the company after the sale. It is a signal that important qualities like honest accounting, pride of product and respect for customers can be found in the company.
In the case of someone who is purely concerned with how much the sale will bring him, you will frequently find that it has been dressed up for sale.