Warren Buffett’s Patience Has Paid Off
Warren Buffett has often said that there are no called strikes in the field of investing. Investors are presented with a series of “pitches” every business day by the market but there are no penalties for failing to swing other than the potential to miss out on interesting opportunities.
Of course, Warren Buffett gets many more “pitches” than ordinary investors. Berkshire Hathaway’s huge cash balance in 2008 created many situations where Mr. Buffett was offered unique investment opportunities but he passed on the vast majority of them. The Wall Street Journal has published a detailed account of the many offers made to Mr. Buffett in 2008 including some details that were previously not known.
One of the early “pitches” came from the CEO of Lehman Brothers on March 28, 2008. According to the article, Mr. Buffett spent the evening of March 28 reviewing Lehman’s latest 10-K report and jotted down the number of pages where he found troubling information. By the time he finished the report, there were too many problems and he passed. Click on this link for a copy of the 10-K cover provided by the Wall Street Journal.
In the video below, the author of the Wall Street Journal article provides some additional background information and commentary:
The Wall Street Journal also made available a letter that Mr. Buffett sent to Treasury Secretary Hank Paulson on October 6, 2008 proposing a public-private investment fund.
When Mr. Buffett finally swung on the Goldman Sachs and General Electric pitches in October 2008, he was able to secure investments that have already proven to be very profitable for Berkshire Hathaway. While he could have achieved even better results by waiting for the March 2009 lows, there was no realistic way to forecast the exact low or to time the market to produce an “optimal” result.
The author of this post, Ravi Nagarajan, is a private investor and writer focused on applying value investing techniques to find securities trading well below intrinsic business value. He is a Manual of Ideas contributor and editor of The Rational Walk.
The author owns shares of Berkshire Hathaway.