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47 0 0 0 13 6. Some of the Oracle of Omaha’s best investments of his entire career have been ones he has made in the past few years. These days, the thing to say if you want to sound smart about Warren Buffett is that the Oracle of Omaha’s crystal ball has cracked. P 500, increasing less than the broad market index over the past five years for the first time in history. Buffett has acknowledged that his hand picked successors Todd Combs and Ted Weschler, have done better in recent years than he has.
And yet, some of Buffett’s best investments of his entire career have been ones he has made in the past few years. What’s more, if Buffett has lost it, someone forgot to tell the market. Here are Buffett’s greatest investments of all time, ranked by annual average rate of return. It’s a testament to how successful Buffett has been. ABC, Gillette, and auto insurance company Geico, were not good enough to make the list. China’s 2012 Economic Growth Likely To Reach 8. Nonetheless, some of his greatest investments, particularly his recent ones, have been in China.
In 2002 and 2003, Berkshire bought 1. One of Buffett’s best recent investments came as a suggestion from his long-time lieutenant Charlie Munger. In 2008, Munger sold Buffett on Chinese car battery company BYD by saying that its CEO, Wang Chuan-Fu, was quite obviously a descendant of both Thomas Edison and Jack Welch. He solves problems like Edison and gets things done like Welch, Munger said. I’ve never seen anything like it in my life. Munger has since said that he thinks the adoption of electric cars will take longer than many think, but he said he has plenty of faith in Chuan-Fu, and he and Buffett have been rewarded for that.
Shortly after making the investment, he talked it up in the pages of Fortune magazine. But perhaps the most notable thing about Buffett’s investment in Freddie is not how well it did, but when he sold. That spelled trouble to Buffett and, within a year, Berkshire had dumped its entire stake in the company. In 2003, news came out that Freddie Mac had regularly misreported its earnings. In 2008, at the start of the financial crisis, Freddie Mac, along with its sister company Fannie Mae, was on the hook for piles and piles of unwise mortgage loans, and had to be bailed out by the government. 12 a share, it was a textile company and one of the largest employers in New Bedford, Mass.
It quickly became Buffett’s acquisition vehicle. He first bought up insurance companies and then a whole host of other kinds of companies, including retailer Nebraska Furniture Mart, See’s Candies, catalog company Oriental Trading, ice cream scooper Dairy Queen, underwear maker Fruit of the Loom, railroad firm Burlington Northern, and, most recently in partnership with Brazilian investment firm 3G, ketchup maker Heinz. Buffett shuttered the textile business in 1985, and he moved the company’s headquarters to his hometown, Omaha, long before then. The true success of Berkshire is the combination of the cash generated by its insurance business and Buffett’s ability to invest that cash far better than anyone else on the planet. But Buffett has also proven good at picking managers and having a light touch. Only when companies prove to be a problem, like paint company Benjamin Moore, has Buffett swooped in. Bank stocks were being battered by the savings and loan crisis, and Buffett characteristically took advantage of the market turmoil to buy into one of the highest quality banks he could find.
Wells was too much of a bargain to pass up. Last year, it earned more money than any other bank in the country. Berkshire is still Wells Fargo’s largest outside shareholder, and Wells would like Buffett and Berkshire to stick around. Buffett has said the best investment he ever made was not a stock or a bond or even in real estate, but buying a copy of The Intelligent Investor, a book written by Benjamin Graham. Buffett read the book when it came out in 1949 and later enrolled at Columbia Business School in order to take classes with Graham. Buffett says the book still guides his investment decisions today, and he has recommended it to Bill Gates, among others.