Friday, February 19, 2010

5 Minute Professor - Warren Buffett

Warren Buffett is a personal hero of mine. Imagine my surprise to hear him as the subject of the 5 Minute Professor on Real Radio - The Philips Phile. Here is a transcript of that edition. Kudos to Bill Keevan, the Five Minute Professor. You can follow Bill at Facebook by searching FIVE MINUTE PROFESSOR and joining the group.


One of the richest men in America. The Sage of Omaha. He was born August 30, 1930. He filed his first tax return during WWII 1943 – He listed the cost of his bike and his watch as business expenses related to his newspaper route. He was 13.

He was not born poor… He was the son of Howard Buffett – a ...US Representative from Nebraska from 1942 – 1948 and again from 1950 -52. Howard was opposed to the Korean War because he felt that (quote) Even if it were desirable, America is not strong enough to police the world by military force. (1950) Warren went to the Wharton Business school at Upenn for two years and completed his BS in Economics at the University of Nebraska and then went to Columbia for his Masters.

He started working at his father’s investment firm in 1951 .. started his own partnership in 1956 and was a millionaire (at least on paper by 1962 – he was 32 years old. Warren married Susan Thompson in 1952.

In 1977, Susan decided she wanted to pursue a career as a singer after Neil Sedaka convinced her to move to Francisco… but the Buffetts stayed married until her death in 2004. They lived separately but vacationed together. Before moving away… Susan introduced Warren to Astrid Menks. Astrid moved in just after Susan moved away and eventually Christmas cards would be signed by Warren, Susie and Astrid… After Susie died in 2004 – Bono played at her funeral, Warren married Astrid in 2006 in a small ceremony. – shows you how people and organizations are inter-connected. Astrid’s only connection is Warren … Angelina Jolie

Susan had owned about 2.2 % of Warren biggest venture Berkshire Hathaway -- she was worth $3 Billion and was the 153rd richest person in America. Berkshire Hathaway made news this week. ...This enormous conglomerate bought out the rest of Burlington Northern Santa Fe railroad and replaced it in the S & P 500. That is noteworthy for a few reasons… numbers one --- it had to execute a 50 -1stock split on January 21st to qualify as a readily available and liquid security. It only splits its B Class shares they are trading today at about $76 a share – that would have been $3800 pre-split. And that isn’t the big number – the Class A shares which did not split … are trading over $114,000 per share …

Financial info update -- Outstanding shares – 1.55 Billion only 1.12 Billion of these are in the float --- that means that the company hold 430,000 shares. Since there are 1.55 million shares and they trade at 114,000 each the Market capitalization --- also called market Cap --- 176.99 Billion

Warren has started to... give away over 85% of his vast wealth in 2006… he donated the bulk of it to the Bill and Melinda Gates foundation… the foundation is the largest holder of BRK A shares --- they have 77 million shares … next largest shareholder – Warren – he has a scant 1.5 million… and then the next largest holder -- a guy named Stephen Burke – he has 5.

Berkshire Hathaway is not very popular as an addition to the S & P in part because Warren does not pay dividends … this addition effectively lowers the dividend return of S & P funds by over ½ of one percent.

Berkshire Hathaway started out as a textile firm … originally founded in 1839 in Rhode Island … through mer...gers it became Berkshire Hathaway in 1955 .. Warren saw that it was undervalued and bought it in 1962 and then started buying not just stock but entire companies and including them under the Berkshire hathaway umbrella… Berkshire currently wholly owns 37 companies including – GEICO – since 1996, Dairy Queen, Pampered Chef, Fruit of the Loom (2002), Business Wire (2006), Helzberg Diamonds, Burlington Northern Santa Fe – last week … they also own 13% of American Express, almost 10% of Anheuser- Busch and Coca-Cola … as well as 18% of the Washington Post.

1) James William (call me Jimmy) Buffett is no relation … He was born Dec 25, 1946 in Pascagoula, MS. Jimmy is the poorer Buffett though .. he only manages to generate about $100 million per year in album sales and licensing arrangements. So to supplement his income… how many consecutive years has Jimmy been out on... tour at least once.

26 years … since 1984 and he plans to go out this year as well … with the Under the Big Top Tour. Starting on the 20th in Jacksonville… Playing the Amway Arena on the 25th.

2) His highest charting single is Margaritaville … his only Number 1 album to date was 2004’s License to Chill… His latest album is “Buffet Hotel” without the second t that both Warren and Jimmy have in their name … A buffet is an 18th century French term for food laid out for self-service… it was named for the furn...iture that it was laid out on. I Japan – a buffet is referred to by what name for 8th to 13th Century European Explorers who exacted tribute from ports as far flung as the Caspian sea, Gibraltar, Iceland, Greenland and a place they called – Vinland.


3) One of my greatest childhood memories of the 23rd state involve an ice cream buffet at a restaurant called The Viking. Can you name the 23rd state… it joined the Union in 1820… only borders one state … and is the only state with a one-syllable name.


4) The longest US state names have 5 syllables… can name any of these 6 states. Two sets are neighbors, three are original colonies, One joined the Union during the Civil War. One was briefly a Republic, One was founded by the French.

California, Louisiana, North Carolina, South Carolina, West Virginia and Pennsylvania

5) Three of these states , LA, NC and SC seceded from the Union in 1861 despite pleading from what Illinois Senator who came in second in the popular vote in the Presidential election of 1860?

Stephen Douglas was on over 29% of the votes cast but only won 4 Electoral College votes. In spite of his support of slave...ry as an economic institution, he did not believe that secession was legal. Douglas died in 1861.

6) Twelve states honor Stephen Douglas with counties named in his honor, including which state … whose Capital is named for an 1860 Presidential rival.

Nebraska , Lincoln

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