Investing
Warren Buffett's 1963 letter to Buffett Partnership partners, one of the letters in Buffett Partnership Letters, 1957–1970.
“Within [the investment companies'] institutional framework and handling the many billions of dollars involved, the results achieved are the only ones attainable. To behave unconventionally within this framework is extremely difficult.”
“If, over a meaningful period of time, Buffett Partnership can achieve an edge of even a modest number of percentage points over the major investment media, its function will be fulfilled.”
“[Generals'] main qualification is a bargain price; that is, an overall valuation on the enterprise substantially below what careful analysis indicates its value to a private owner to be.”
“We like good management - we like a decent industry - we like a certain amount of ‘ferment’ in a previously dormant management or stockholder group. But we demand value.”
“[Workouts] arise from corporate activity - sell-outs, mergers, reorganizations, spin-offs, etc. In this category we are not talking about rumors or 'inside information' pertaining to such developments, but to publicly announced activities of this sort.”
“We do not want to get active merely for the sake of being active. Everything else being equal I would much rather let others do the work.”
“Active or passive, in a control situation there should be a built-in profit. The sine qua non of [a control situation] is an attractive purchase price.”
“Once control is achieved, the value of our investment is determined by the value of the enterprise, not the oftentimes irrationalities of the marketplace.”
“I can't promise results but I can promise a common destiny.”
“I definitely feel some borrowed money is warranted against a portfolio of workouts, but feel it is a very dangerous practice against generals.”
“When a workout falls through, the resulting market value shrink is substantial. Therefore, you cannot afford many errors, although we fully realize we are going to have them occasionally.”