The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [540]
7. The 1955 Russell-Einstein Manifesto. Russell was president of the Campaign for Nuclear Disarmament in 1958, and was cofounder with Einstein of the Pugwash Conference, a group of scientists concerned about nuclear proliferation.
8. Interview with Dick Holland.
9. Buffett and his chief administrative officer John Harding chose a set of representative large-cap stocks, in effect creating a market index. Buffett did not want to execute the trade through a brokerage firm because the broker kept the proceeds from the sale and paid no interest to him. Harding contacted university endowment funds. Buffett went personally to Chicago to get shares. The idea of lending directly to a short-seller was so novel at the time that most universities passed. However, Harding was able to borrow about $4.6 million of stock.
10. Buffett put $500,000 into treasury bills in the first quarter of 1966.
11. Interview with Susie Buffett Jr., Meg Mueller, Mayrean McDonough.
12. Interview with Kelsey Flower.
13. Interview with Susie Buffett Jr.
14. Interview with Marshall Weinberg.
Chapter 29
1. “The Raggedy Man,” by James Whitcomb Riley, a children’s poem about a handyman.
2. Interview with Chuck Peterson.
3. Buffett tells the story, which Charlie Heider recalls and found unforgettable. Parsow doesn’t recall it.
4. Both Byer-Rolnick and Oxxford were acquired by Koret in 1967.
5. Interview with Sol Parsow.
6. Gottesman worked for Corvine and Company, which, he says, was going out of business. He founded his own firm, First Manhattan Co., in 1964.
7. Interview with Sandy Gottesman.
8. “That’s not negotiating,” claims Munger. “It’s just using pithy examples to steer people to what they should be doing. Sure, it’s persuasion, but it’s legitimate persuasion.”
9. The Kohns were planning to sell for a quarter less than the tangible net assets of the business. Gottesman had done a private placement of debentures for Hochschild-Kohn with Equitable Life that year and was familiar with its financial statements. His mother-in-law, her brother Martin Kohn, and another sister were equal stockholders who owned a class of preferred stock in the company. The preferred stock was in arrears, not having paid a dividend in some time. In effect, therefore, they could have controlled the business. They had not exercised this privilege, however. The common stock was owned largely by their relative Louis Kohn, from another branch of the family and second in command after Martin Kohn.
10. DRC Offering documents for 8% debentures, December 18, 1967.
11. He gave them the money anyway, partnered with National City to provide $9 million in short-term financing for the deal. Diversified Retailing Company, Inc., Prospectus, December 18, 1967. According to Gottesman and Moody’s Bank & Finance Manual, Martin Kohn was on the board of Maryland National Bank.
12. Charles T. Munger testimony, In the Matter of Blue Chip Stamps, Berkshire Hathaway Incorporated, HQ-784. Thursday, March 20, 1975, page 187.
13. Buffett mentioned the problem to the partners in his mid-1966 letter but stressed the more important question of buying a company rather than a stock. Another factor was the banks, which had also started issuing credit cards, cutting further into Hochschild-Kohn’s edge.
14. Interview with Charlie Munger. The company was purchased in April 1967.
15. Diversified Retailing Company, Inc., Prospectus, December 18, 1967.
16. Buffett says Rosner told him he got Aye Simon’s consent to sell the business by saying something along the following lines: “And to hell with you. If you’re going to second-guess it, you come down and run the store.” The relationship was irretrievably broken.
Chapter 30
1. Including Buffett’s stock in Data Documents, a separate investment, the Buffetts’ net worth was somewhere between $9.5 and $10 million.
2. Buffett’s description, in Patricia E. Bauer’s “The Convictions of a Long-Distance Investor,” Channels, November 1986, was, “One time we had a dog on the roof,