Buffett Partnership Letter 1959 Annual

Warren E. Buffett | February 20, 1960

1959 Performance

Year	Dow	Partnership	Limited Partners
1957	-8.4%	10.4%	9.3%
1958	38.5%	40.9%	32.2%
1959	19.9%	25.9%	20.9%

Six partnerships achieved overall net gains ranging from 22.3% to 30.0%, averaging about 25.9%.

Market Context

While the Dow advanced 16.4% (19.9% with dividends), more stocks declined than advanced on NYSE (710 to 628). Most investment trusts had difficulty compared to the Industrial Average.

"By previous standards, the present level of 'blue chip' security prices contains a substantial speculative component with a corresponding risk of loss."

3-Year Cumulative Results

Period	Partnership Gain	Dow Gain
1957	10.4%	-8.4%
1957-58	55.6%	26.9%
1957-59	95.9%	52.2%

Portfolio Composition

Largest Position (35% of assets):

"This company is partially an investment trust owning some thirty or forty other securities of high quality. Our investment was made and is carried at a substantial discount from asset value."

Buffett was the largest stockholder by considerable margin, and the two other large holders agreed with his ideas.

Remaining 65% in undervalued securities and work-outs.

Investment Approach

"To the extent possible, I continue to attempt to invest in situations at least partially insulated from the behavior of the general market."

This policy should lead to superior results in bear markets and average performance in bull markets.

Source

Warren E. Buffett, February 20, 1960.