Warren Buffett

Warren Edward Buffett (born August 30, 1930) is a wealthy American investor and businessman. Nicknamed the "Oracle of Omaha", Buffett has amassed an enormous fortune from astute investments, particularly his company Berkshire Hathaway, of which he holds more than 31% as of 2005. With an estimated net worth of $40 billion as of 2005, he is ranked by Forbes as the second-richest person in the world, behind Bill Gates.

Investments

Among the companies he invested in during his tenure as managing partner of the Buffett Partnership was Berkshire Hathaway, a New Bedford textile company. Buffett eventually liquidated the textile business but kept the name and turned the shell of the company into an investment business. He used the cash flow from the textile business to make acquisitions in the insurance field, which generated a steady cash flow for even further investments.

Related Topics:
New Bedford - Textile - Insurance

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Buffett customarily focuses his investments in companies with good long-term growth potential. Identifying such companies is the difficult part. More value is generated by the companies he owns than his stock market investments, such as Coca-Cola, that attract more attention.

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Buffett famously avoids high tech companies, not because they are inherently less desirable, but because he prefers businesses he understands.

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Buffett has always been attracted to insurance companies because they generate substantial float deriving from their insurance premiums. These companies provide a source of funds that he then allocates to Berkshire Hathaway's subsidiaries and uses to acquire new companies. Berkshire owns GEICO, a provider of various types of property (primarily car) insurance, and General Re, notable for being slightly more adventurous in entering markets such as reinsurance and the nascent life settlement market.

Related Topics:
Float - GEICO - General Re - Life settlement

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Buffett is still living in the same house in suburban Omaha that he paid $31,500 for in the 1950s.

Related Topics:
Suburb - 1950s

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In addition to being a major investor in Coca-Cola, he is also a fan of their products. In his 1991 letter to shareholders, Buffett says that he drinks five cans of Cherry Coke a day.

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Warren Buffett has not yet named any clear successors to run Berkshire Hathaway. He has disclosed that a letter to Berkshire's board of directors exists—only to be opened after his death. It likely suggests his role as CEO be split in two—with one executive handling the operations of the company and the other executive in charge of its various investments. During the annual shareholders meetings in 2002, 2003, and 2004, he dropped hints as to which two persons will take over both roles.

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