Buffett Partnership Letter 1968 Annual
1968 annual - 58.8% gain vs 7.7% Dow, 12-year compound 31.6%, partnership history
warren-buffettbuffett-partnershipperformance1968
Buffett Partnership Letter 1968 Annual
Warren E. Buffett | January 22, 1969
1968 Performance
| Metric | Dow | Partnership | Limited Partners |
|---|---|---|---|
| 1968 | +7.7% | +58.8% | +45.6% |
Overall gain: $40,032,691
"This result should be treated as a freak like picking up thirteen spades in a bridge game."
Investment Categories
| Category | Avg Investment | Gain |
|---|---|---|
| Controls | $24,996,998 | $5,886,109 |
| Generals - Private Owner | $16,363,100 | $21,994,736 |
| Generals - Relatively Undervalued | $8,766,878 | $4,271,825 |
| Workouts | $18,980,602 | $7,317,128 |
Controls Performance
Diversified Retailing Company (80% owned) and Berkshire Hathaway (70% owned) had combined after-tax earnings of over $5 million.
Associated Cotton Shops and National Indemnity both earned about 20% on capital employed—among Fortune 500, only 37 companies achieved this in 1967.
On Market Price vs Value
"Price is what you pay. Value is what you get."
Valuations: B-H at $25 yearend 1967 (market ~20), $31 yearend 1968 (market ~37).
The Problem
"The quality and quantity of ideas is presently at an all time low."
Cumulative Record (1957-1968)
| Metric | Dow | Partnership | Limited Partners |
|---|---|---|---|
| Cumulative | 185.7% | 2610.6% | 1403.5% |
| Annual Compounded | 9.1% | 31.6% | 25.3% |
Partnership History
- May 5, 1956: Buffett Associates formed with 7 limited partners ($105,000) + $100 from Buffett
- January 1, 1957: Combined net assets $303,726
- January 1, 1969: Net assets $104,429,431
Source
Warren E. Buffett, January 22, 1969.