The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [556]
7. As of December 2007, these shares would be worth $747 million.
8. That Buffett, who had never borrowed a significant amount of money in his life, thought it made sense for his sisters to buy Berkshire stock using borrowed money, with only 5% down, speaks volumes about how cheap he thought the stock was and how good its prospects were at the time.
9. Berkshire owned so much Washington Post stock and Buffett’s position on the board was such that, if it bought a TV station, its ownership would be attributed to the Washington Post, pushing it over the limit of five stations that it could own.
10. Howard E. Stark letter to Warren Buffett, June 18, 1975. Also see Lee Smith, “A Small College Scores Big in the Investment Game,” Fortune, December 18, 1978.
11. Katharine Graham, Personal History. New York: Alfred A. Knopf, 1997.
12. The new printing-press technology that owners had installed made management hostage to the skilled employees who knew how to run the complex equipment.
13. Katharine Graham, Personal History.
14. Ibid.
15. Interview with George Gillespie.
16. According to Personal History, this contract would have given the pressmen the highest wages in the nation and security from layoffs. Negotiations broke down in part because the Post refused to hire back the workers who had damaged the presses.
17. According to Personal History, fifteen former Post pressmen pleaded guilty to various misdemeanor charges. Six who had damaged presses and committed more serious crimes were jailed.
18. They sold their interest in Source Capital to its managers.
19. With the press strikes and Watergate affair behind her, Katharine Graham began to focus on growth at the Washington Post in the mid-1970s. Up until then, the company didn’t have sufficient profits and there was “little more than a hit-or-miss strategy” for growth (Personal History). Sales and earnings started to take off in 1976, around the time that they started buying back company stock. Earnings per share were $1.36 in 1976 vs. $0.36 in 1970. Return on equity was 20% compared to 13%. Profit margin grew to 6.5% from 3.2%. And it kept improving from there (Value Line report, March 23, 1979).
20. Charles Munger letter to Katharine Graham, November 13, 1974.
21. Interview with Don Graham.
22. C. David Heymann, The Georgetown Ladies’ Social Club. New York: Atria Books, 2003.
23. Interview with Don Graham.
24. Interview with Susie Buffett Jr., who credits her parents for not interfering.
25. Interview with Susie Buffett Jr.
26. Interview with Dick and Mary Holland.
27. Interview with Susie Buffett Jr.
28. Ibid.
29. Interview with Howie Buffett.
30. In an interview Peter Buffett described his routine at this time.
31. According to friends of Susie’s who say she blamed Graham for the relationship.
32. Al Pagel, “What Makes Susie Sing?” Omaha World-Herald, April 17, 1977.
33. Ibid.
34. This is Jack Byrne’s recollection of Davidson’s remonstration in an interview. Jack being a colorful guy, it is possible that his recollection is a bit more colorful than what Davidson actually said.
35. Interview with Tony Nicely.
36. Warren Buffett memo to Carol Loomis, July 6, 1988.
37. By 1974, the whole insurance industry was producing what rating agency A. M. Best called “unbearable” losses of $2.5 billion from a vicious price war and inflation of everything from car repairs to lawsuits. (A.M. Best Company Comment on the State of and Prospects for the Property/Liability Insurance Industry, June 1975.) The states were also passing “no-fault” insurance legislation, which meant that insurers had to pay for an accident regardless of who caused it. The federal government also slapped price controls on the industry during the Middle East war. Meanwhile, the devastating stock market of 1973–74 had wiped so much value from GEICO’s stock portfolio that for every share of stock, investments that had once been worth $3.90 were now worth a dime a share (Leonard Curry, “Policy Renewed: How GEICO Came Back from the Dead,” Regardie’s, October/November