I am really grateful to Riddhi for helping me with editing work.
WB Letter 1964
Mr. Buffett had made an investment into the “Texas National Petroleum” where the announcement was made of sell out of oil and gas producing business to Union Oil of California.
This kind of situation has a protected downside and we can generate a decent annualized return. Buffett had made a decent annualized return on this workout.
We can make a decent return from such situations in India also. Here are some examples which are taken from Prof. Sanjay Bakshi’s note. (http://ppfas.com/media/articles/sanjay-bakshi/special-situations.pdf)
Mr. Buffett had sold off Dempster mill and he mentioned that “Our business is making excellent purchases — not making extraordinary sales.” This shows that Buffett has emphasized on the buying decision and if we think wisely then it’s only the buying decision that is in our control; so we should focus on buying a business at proper value hence reducing the additional efforts of selling.
WB Letter 1965
Mr. Buffett demonstrated an outstanding performance in Down Jones and other few investment management companies over a period of time.
Up to 1964, Mr. Buffett had categorized his investment operations into 3 categories (i.e. General, Workouts, and Controls) but from the year 1965, Mr.Buffett expanded his categories of investment operations into 4 (i.e. General -Private Owner Basis, Generals -Relatively Undervalued, Workouts and Controls).
Workouts and Controls remain unchanged from the previous series.