The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [120]
The fastest way to that goal was to raise more money to manage. In August, he went back to New York to attend the final shareholders’ meeting of the Graham-Newman Corporation. Everyone important on Wall Street seemed to be present at Graham-Newman’s wake. Investor Lou Green, his head wreathed in clouds of foul-smelling smoke from an enormous stogie, towered over them from his six-foot-four height.16 He accused Graham of making a big mistake. Why had Graham and Newman not developed talent? he asked. “They’d been working here for thirty years building up this business,” he declared to everyone standing nearby. “And all they would have had to run it was this kid named Warren Buffett. He’s the best they could come up with. And who’d want to ride with him?”17
Warren’s long-ago mistake of telling Lou Green that he bought Marshall-Wells “because Ben Graham bought it” had now come back to dilute Graham’s endorsement of him in front of an important audience, with unknowable consequences. Yet Graham’s imprimatur had already paid him one important dividend. Homer Dodge, a Harvard-educated physics professor who was the president of Norwich University in Northfield, Vermont, until 1951, and a long-time investor in Graham-Newman, had gone to Graham and asked him what he should do with his money now that Graham-Newman was shutting down. “And Ben said, ‘Well, I’ve got this fellow who used to work with us that might be a possibility.’”
So one hot Midwestern day that July, Dodge had stopped in Omaha on his way to a vacation out west, a blue canoe strapped to the roof of his woody wagon. “He talked to me for a while and said, ‘Would you handle my money?’ And I set up a separate partnership for him.”
Dodge gave him $120,000 to manage in the Buffett Fund, Ltd., on September 1, 1956.18 That was more money than the original Buffett Associates partnership—an enormous step*19 that made Warren a professional money manager, not just a former stockbroker running a little money for his family and friends. Now he had invested for someone recommended by Ben Graham.19
“Later in the year, a friend of mine, John Cleary, who used to be my dad’s secretary in Congress, saw in a legal notice that I’d formed this partnership and asked me what it was. I told him about it, and he said, ‘Well, how about doing it with me?’ So we formed something called B-C, Ltd. That was the third partnership. He put in fifty-five thousand dollars.”20
With the formation of the B-C partnership on October 1, 1956, Warren was now managing more than half a million dollars, including his own money, which was not in any of the partnerships. He operated out of a tiny study at home that could be entered only by passing through the bedroom. He worked odd hours, a night owl like Susie, reading annual reports in his pajamas, drinking Pepsi-Cola and eating Kitty Clover potato chips, enjoying the freedom and solitude. He pored over the Moody’s Manuals looking for ideas, absorbing statistics on company after company. During the day, he went to the library and read newspapers and industry trade magazines. As with his boyhood paper route, he took care to handle everything of value personally, a pleasure in and of itself. He typed his own letters on an IBM typewriter, carefully lining up his letterhead sheet on the carriage. To make copies he slid sheets of blue carbon paper and tissue-thin onionskin behind the first page. He did all his own filing. He did the bookkeeping himself and prepared his own tax returns. With its numbers, accuracy, and the measuring of results, the recordkeeping aspect of the job pleased him.
Every stock certificate was delivered directly to him, made out in the partnerships’ names, rather than left on deposit with a broker as