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Despite looking under dozens of rocks in recent weeks I have not found any new gems. I’ll keep looking – particularly for the Modified-PER portfolio (I’m about a quarter of the way through the entire market). In the absence of new bargains to report to you I’ll continue the Warren Buffett story.
Today we get to the time when Warren dissolved the Partnership handing cash and/or shares to his wealthy admirers.
The dreaded letter
In late November 1969 he formally gave 30 days notice of his intent to retire from the Partnership.
In an earlier letter he had expressed his expectation that each partner would receive a cash payment amounting to about 56% of their start of the year share of the Partnership. But, because he sold securities for more than anticipated, the figure ended up at 64% in January 1970.
In addition they would get proportional shareholdings in Diversified Retailing and Berkshire Hathaway. However, if they chose to dispose of these shares that will bring more cash amounting to 30% -35% of their January 1st 1969 capital.
That still left some capital tied up in securities. Buffett expected to sell these in the first half of 1970. Thus further cash payments were to be expected.
Rationally, he did not want to rush the process and so allowed for the possibility that even after June 1970 securities might still remain to be liquidated and a final distribution made.
The two companies
At the end of 1969 the Buffett Partnership owned:
1.800,000 of the 1,000,000 shares in Diversified Retailing Company (First Manhattan, run by Sandy Gottesman, owned 100,000; Wheeler, Munger and Company, run by Charles Munger, owned 100,000). Diversified Retailing owned 100% of Associated Retail Stores.
2.691,441 of the 983,582 shares in Berkshire Hathaway, 70.3%.
He did not want to oversell the attractions of holding shares in these…….To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1
