By the time Buffett had dinner with Catherine in 1973, he was no longer just an investor who bought newspaper stocks. To a certain extent, he had become a business tycoon. He owns Berkshire Hathaway and Diversified Retail, and Charlie Munger is the czar of blue-chip printing companies.
The intricate relationships between these three companies consolidated the business relationship between Buffett and Munger , which is very similar to the prototype of a business empire created by a great investor. This investor is Gordon Wallace, whom Buffett particularly admires. His company, American Manufacturing Company, is like a Russian matryoshka doll. When you open it layer by layer, you will find that there are companies one after another: Meagan Tyler Leno Casting Machine Company, Crane Company, Electronic Automatic Lighting Company. The companies' stocks are publicly traded because, although Wallace controls them, he does not own any of them outright. Buffett has admired Wallace's model since he first entered the investment industry. He thought about how to get the most from the stocks Wallace purchased. He kept telling friends about Wallace. "The only way is to stand under a big tree to enjoy the shade." He said.
Wallace has a small closed investment company called "Century Investors, Inc." It is required to submit transaction reports to the U.S. Securities and Exchange Commission . When he could buy a company's stock at a deep discount, he made a series of acquisitions, one after another, and finally bought the large company Megan Taylor Leno Casting Machine Company, in which he owned 2/3 of the shares. Also owned by American Manufacturing Corporation. Back then, you didn't have to file a report with the Securities and Exchange Commission or publicize the shares you purchased, so no one would know. So he kept buying until he obtained a controlling stake. He purchased a controlling interest in the Electric Automatic Illuminating Company, operating in part through the Meagan Taylor Leno Casting Machine Company. He did the same for the pipe supply branch of the Crane Company; another was the Webster Tobacco Company, both of which were cheap from a price point of view. Everything is on sale and you can keep buying them, making you more money with each purchase you make. Usually I buy a few of them. Like Wallace, I own Meagan Taylor Leno Casting Machine Company, I own Electronic Auto Lighting Company, and I own Made in America. So where does value come from? People ask this question all the time. But as long as you feel like you're with that smart guy, then you know your acquisitions are going to be valuable in the end.
Earlier, Buffett went to see Wallace at his office at White-Weld & Co. in Boston.
I was a little worried, so I said, "Mr. Wallace, I'd like to ask you some questions." He said, "Ask me!" I immediately started thinking about the problem. he treats me well. I have been following him for 10 to 15 years. He's a bit like Graham , very much. No one noticed him except me. He was my type and someone I modeled myself on for a while. Making money this way is easy to understand and very safe. While this may not necessarily make you a ton of money, you know you will.
What interested Warren was Wallace's buying model: a legal way for one company to buy another company's low-priced stock.
You know, you don't have to think about everything, Newton once said: "If I can see further than others, it is because I stand on the shoulders of giants." There is nothing wrong with standing on the shoulders of others. .
Finally, Wallace consolidated his empire into one large company, the Eltra Corporation, formed from the merger of the Meagan Tyler Leno Casting Machine Company and the Electronic Automatic Illuminating Company. Its stock is now Bill Ruane's favorite because the company's earnings are growing at 15% a year.
Buffett and Munger's company is starting to look a bit like Eltra before the merger. Berkshire Hathaway is the largest shareholder in the diversified retail company and also owns stock in the blue-chip stamp company. These companies all hold shares in some unlisted companies. Blue Chip Printing, for example, owns See's Candy, which is so profitable that it even makes up for losses in its shrinking printing business.
