The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [158]
Along the center of the trading room ran a twenty-foot wooden table, which the firm had acquired somewhere on its way to a garbage dump. Its surface bore the marks of generations of schoolchildren armed with penknives. To write down figures, a tablet had to be placed underneath the paper; otherwise, “Todd loves Mary” would be embossed into the text.
On one side of the child-scarred table, Howard Browne ruled with benign authority. He and his partners faced the firm’s trader, who—like all traders—sat, jumpy and restless, waiting for the phone to ring so that he could trade. Next to him, an empty space at the table served as the “visitors’ desk.” The cheapest of wooden filing cabinets lined the walls.
Nowhere else in New York did Buffett feel so at home as sitting at the Tweedy, Browne visitors’ desk. The firm had branched out into arbitrage, workouts (all-but-completed turnaround situations where a little money remained to be made), and “stubs”(companies being acquired and broken up)—all the sorts of things he liked. It traded securities such as fifteen-year Jamaica (Queens) Water warrants—rights to buy the water company’s stock, which rose whenever there was speculation that New York City would someday take over the waterworks. They fell again when speculation lulled. Tweedy, Browne bought them every time they dropped and sold them every time they rose, over and over and over again.
The firm also made a specialty of fencing with the managements of these obscure, undervalued businesses, trying to force out hidden value, as with Sanborn Map. “We were always in court suing,” one partner says.28 All of it reeked of the old Graham-Newman days and bore little similarity to the gargantuan American Express deal, but Buffett loved the atmosphere. Tom Knapp researched stocks and spent his days plotting practical jokes when he wasn’t orchestrating trades. He had commandeered a huge storage closet, filling it with the four-cent Blue Eagle stamps he and Buffett had made the mistake of buying and topographical maps of the Maine coastline. The pile of maps continually grew, for Knapp was funneling the cash he made from stocks into buying up the coast of Maine.29 The pile of Blue Eagles slowly shrank as Tweedy, Browne pasted forty stamps onto each batch of the Pink Sheets they sent to Buffett once a week, every week.
The Pink Sheet quotations for stocks not listed on the New York Stock Exchange were stale the moment they went to print. Buffett used his Pink Sheets merely as a starting point for the telephonic bazaar in which calls to numerous brokers might be required to make a trade. He was a master at working this system through his brokers. The lack of a publicly posted price helped reduce competition. Someone who was willing to call every market-maker and squeeze them mercilessly had a meaningful advantage over the less energetic or the more fainthearted.
Browne would call Buffett to let him know they had XYZ stock on offer at $5 a share.
“Hmmm, $4¾ bid,” Buffett would say, without hesitation. This maneuver, Casting the Line, would fish out how hungry the seller was.
After calling the client to see if he would take a lower price, Browne would call Buffett with the response: “Sorry. Can’t take less than five bucks.”
“Unthinkable,” Buffett would answer.
A few days later, Browne would call Buffett again. “We got the stock at $4¾. We’ll go along with $4¾ bid.”
“Sorry,” Buffett would now say instantly. “$4½ bid.”
Browne would go back to the seller, who would say, “What the hell? What happened