Berkshire-Past,Present and Future In the Beginning On May 6.1964.Berkshire Hathaway.then run by a man named Seabury Stanton.sent a letter to its 树mo网ef信tsi乃p时e1 ed版k1 red $11.50,and he Then cae f That was a monumentally stupid decision. Berkshire was then a northern textile manufacturer mired in a terrible business.The industry in which it edwas heading south,both metaphorically and physically.And Berkshire,for a variety of reasons,was u ange course een wio Berkshire's own ousiness forty years ago.During the war years this trend was stopped.The trend must continue until supply and demand have been balanced. bothbouta yearaer that board meeting Berkshire Fine Spinning Associates and Hathaway Manufacturing entury joine urteen plants an viewed as aereement.however.soon mor aA尚eatn the肉npr I purchased BPL's first shares of Berkshire in December 1962.anticipating more closings and more 0,a wi 2 was enjoyed,however,no more could be expected. Berkshire thereafter stuck to the script:It soon closed another two plants,and in that May 1964 move,set disearded butts. Instead,irritated by Stanton's chiseling.I ignored his offer and began to aggressively buy more Berkshire shares.Berkshire – Past, Present and Future In the Beginning On May 6, 1964, Berkshire Hathaway, then run by a man named Seabury Stanton, sent a letter to its shareholders offering to buy 225,000 shares of its stock for $11.375 per share. I had expected the letter; I was surprised by the price. Berkshire then had 1,583,680 shares outstanding. About 7% of these were owned by Buffett Partnership Ltd. (“BPL”), an investing entity that I managed and in which I had virtually all of my net worth. Shortly before the tender offer was mailed, Stanton had asked me at what price BPL would sell its holdings. I answered $11.50, and he said, “Fine, we have a deal.” Then came Berkshire’s letter, offering an eighth of a point less. I bristled at Stanton’s behavior and didn’t tender. That was a monumentally stupid decision. Berkshire was then a northern textile manufacturer mired in a terrible business. The industry in which it operated was heading south, both metaphorically and physically. And Berkshire, for a variety of reasons, was unable to change course. That was true even though the industry’s problems had long been widely understood. Berkshire’s own Board minutes of July 29, 1954, laid out the grim facts: “The textile industry in New England started going out of business forty years ago. During the war years this trend was stopped. The trend must continue until supply and demand have been balanced.” About a year after that board meeting, Berkshire Fine Spinning Associates and Hathaway Manufacturing – both with roots in the 19th Century – joined forces, taking the name we bear today. With its fourteen plants and 10,000 employees, the merged company became the giant of New England textiles. What the two managements viewed as a merger agreement, however, soon morphed into a suicide pact. During the seven years following the consolidation, Berkshire operated at an overall loss, and its net worth shrunk by 37%. Meanwhile, the company closed nine plants, sometimes using the liquidation proceeds to repurchase shares. And that pattern caught my attention. I purchased BPL’s first shares of Berkshire in December 1962, anticipating more closings and more repurchases. The stock was then selling for $7.50, a wide discount from per-share working capital of $10.25 and book value of $20.20. Buying the stock at that price was like picking up a discarded cigar butt that had one puff remaining in it. Though the stub might be ugly and soggy, the puff would be free. Once that momentary pleasure was enjoyed, however, no more could be expected. Berkshire thereafter stuck to the script: It soon closed another two plants, and in that May 1964 move, set out to repurchase shares with the shutdown proceeds. The price that Stanton offered was 50% above the cost of our original purchases. There it was – my free puff, just waiting for me, after which I could look elsewhere for other discarded butts. Instead, irritated by Stanton’s chiseling, I ignored his offer and began to aggressively buy more Berkshire shares. 24