Buffett's Transformative Investment in Philadelphia and Reading

This chapter explores Warren Buffett's groundbreaking investment in the Philadelphia and Reading Railroad Company, despite its troubled history and industry decline. It chronicles how Buffett recognized the intrinsic value of the company’s assets, leading to significant changes in corporate governance and influencing his future investment strategies.

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Episode notes

In today’s episode, Clay reviews Brett Gardner’s new book, Buffett’s Early Investments.

Brett is an Analyst at Discerene Group LP, a private investment partnership that invests globally based on a fundamental and long-term value investing philosophy. Like us here at TIP, Brett is also a huge fan of Warren Buffett.

During Buffett’s early partnership years from 1957 to 1969, he compounded his investors’ capital at 23.8% net of fees relative to the Dow Jones, returning just 7.4%.

IN THIS EPISODE YOU’LL LEARN:

00:00 - Intro

02:14 - The primary factors that led to Buffett’s outperformance during early investing years.

06:09 - The parallels between Buffett’s investment in Philadelphia and Reading and how he ended up transforming Berkshire Hathaway in the years that followed.

27:15 - What led Buffett to make an unconventional bet on Disney in 1966.

43:55 - Why Buffett invested in American Express after the Salad Oil Scandal.

And so much more!

Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.

BOOKS AND RESOURCES

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Gardner’s book: Buffett's Early Investments.
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Related Episode: Listen to TIP573: Berkshire's Beginnings w/ Jacob McDonough, or watch the video.
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