Coming soon: a video of Warren Buffett visiting his old Washington, D.C., haunts, including his old newspaper route.
A camera crew followed Buffett last week as he stopped at Alice Deal Junior High School and Woodrow Wilson High School, where his Class of 1947 held its 65th reunion.
He also went to D.C.'s Spring Valley neighborhood, near Van Ness Street and Fordham Road, where his family lived while his father represented Nebraska as a congressman. He knocked on the door of their former house on Northwest 49th Street.
“The house seemed to have shrunk,” Buffett said later that day, during a talk at the Economic Club of Washington. He spoke with the woman who has lived there for more than 30 years. “She was a wonderful woman. We got along very well.”
Then he retraced the route where he delivered newspapers as a youth, earning money that started him on the road to creating Berkshire Hathaway Inc., the Omaha-based investment company he heads.
Buffett's visits to the schools created a stir, although apparently he was not as disruptive as when he was a student. He got mostly Cs and Ds in junior high, graduating 16th out of a class of 17, he said, joking, “I tried to get my record expunged, but I had no luck.” His studies improved in high school, but he teased his teachers about their conservative investments in American Telephone & Telegraph.
About 1,500 people attended Buffett's evening talk, in an interview format. Afterward, club president David Rubenstein gave Buffett a green-and-black Wilson High letter jacket with “47” on the sleeve. “Go, Tigers!” Buffett cheered, recalling the high school mascot.
Among Buffett's comments during the talk:
>> Asked why he left Washington for Omaha, Buffett, 81, replied, “I'm still young, David. I may come back.”
>> Harvard University rejected his application for graduate school. Today, “I understand the development officer's kind of unhappy.”
>> He had read Benjamin Graham's books on investing long before taking Graham's class at Columbia University. “It was inspirational just to be around him. It made a real difference in my life.” Graham's original name was Grossbaum, but his father later Anglicized the family name. Buffett joked that his oldest son, whose middle name is Graham, is glad that the name changed.
>> People who play bridge are starting to recognize Buffett's nickname, T-Bone. He used to cover up his mistakes by exaggerating his age. “When I'd do something dumb, people would say, ‘For a guy who's 103, he's not bad.'”
>> Before his first wife, Susan Thompson Buffett, died, he expected she would be in charge of giving away his wealth. The deal was, “I'll pile it up, and you unpile it.”
>> Berkshire would buy companies from any of 40 countries where the rules of ownership and other factors are favorable, but most potential purchases are still in the United States.
>> Berkshire is in “perfect shape” for his succession. Berkshire has a “special culture. We have an organization that would reject anybody that tried to tamper with that culture.”
>> Buffett reviews his will every five or so years and shows it to his three children, who will be its executors. If they don't understand something, they talk about it because “I want them to agree with it.” The three — Susan, Howard and Peter — will have inheritances, even though 99 percent of his money will go to charity. “In the end, I think they feel very lucky in life.”
>> He doesn't want his name on any buildings or organizations that receive his donations because those groups could raise more money from people who want their names on things.
>> Is Berkshire stock a “buy” at its current price? “The businesses it owns are worth more than the market price, but that's true of other businesses, too.”
The Age of Melbourne, Australia, reported on speculation that Berkshire is arranging to take over the New Zealand catastrophe reinsurance coverage of Suncorp Group of Australia.
The transaction would take place before the June 30 deadline for retail insurers to renew their reinsurance policies — coverage that retail insurance companies buy to protect against large losses. New Zealand suffered extensive earthquake damage last year, causing losses among reinsurers such as Berkshire and driving up premiums for reinsurance.
Berkshire has said disasters last year in Japan, New Zealand and Australia caused $1.1 billion in insurance losses.
The Age said reports in the Quoting Insurance industry newsletter are that Suncorp would pay Berkshire $100 million for the reinsurance coverage. That is angering other reinsurers that were hoping to recoup some of their losses through premiums for future coverage.
Suncorp declined to comment. The increased reinsurance premiums would put pressure on retail insurers to raise premiums for natural disaster insurance, the Age said.
Benjamin Graham's legacy
More on Buffett and Benjamin Graham, whose 1932 book on investing inspired Buffett's early strategy.
The book tells how to determine the value of a company beyond its stock price. Graham's concept of buying a stock if it's priced at less than the company's true value has been the basis for “value investing” ever since.
In a recent video interview for the Street, Gregg Greenberg asked, “When Warren Buffett eventually retires, who will carry on Ben Graham's legacy, in your opinion?”
Fred Martin, author of the book “Benjamin Graham and the Power of Growth Stocks,” responded:
“The person that will emerge is the one that is able to use valuation stock methodologies to buy growth companies. We think that will be the next transition.”
He added: “Buffett and Graham, their philosophies evolved over time. They weren't static. Warren Buffett's not a static investor. So the next generation, the next superstar, will be one that marries valuation stock techniques with buying growth companies.”
The Omaha World-Herald Co. is owned by Berkshire Hathaway Inc.
Contact the writer: 402-444-1080, firstname.lastname@example.org
Have a question for Steve Jordon about the Oracle of Omaha? Submit your questions now, then join Steve at 11:30 on Tuesday to discuss the latest news about Warren Buffett.
Find more of The World-Herald's coverage of Warren Buffett here.