+DCX Systems IPO will open on Oct 31. Price band fixed at Rs 197 to 207
+DCX Systems IPO will open on Oct 31. The price band is fixed at Rs 197 to 207
Sensex: 59,959.85 ▲ 1.10% |
Oliver Chance started the Valley Falls Company in 1839 in Rhode Island (USA). It was involved in textile manufacturing. Over the years, the company expanded rapidly in the textile space acquiring one mill after another. Overlapping over the same period, Berkshire Cotton Manufacturing Company was founded in 1889. Like Valley Falls, Berkshire Cotton Manufacturing was also a big name in textile making. In 1929, the two companies merged to form Berkshire Fine Spinning Associates. Horatio Hathaway was a trader dealing in goods from China and was actively involved in whale hunting in the Pacific Ocean. Horatio started the Hathaway Manufacturing Company in 1888. In 1955, these companies merged to form Berkshire Hathaway. Many now-famous companies from that era started their journey as textile companies. Toyota, Reliance, and Tata are just some of the famous names. After the world wars, textile companies were on the decline. Companies were shutting down mills that didn’t have any use. Berkshire Hathaway too would announce shutting down of its mills once in a while. Warren Buffett and Berkshire Hathaway Berkshire Hathaway was in decline. Warren Buffet reportedly picked up some shares in 1962 because he had observed a pattern every time the company announced shutting down a mill. His plan didn’t quite work out and he decided to get rid of the stocks. The then-head of Berkshire Hathaway made a verbal offer to Warren Buffett in 1964 at a price of $11.50 per share. Warren agreed. A few weeks after that offer, when the written offer arrived, the offer value was slightly reduced – $11.37. Warren was angry about this slightly lower offer. Buffett is known for his calculated and measured moves. At this point, it made sense for Buffett to simply accept a loss and get rid of the stocks at whatever price he was being offered. But he didn’t. He went on to buy more stocks of the company – enough to get control of the company. Once he gained control of the company, he fired the CEO. Berkshire Hathaway, the New Company And just like that, Warren Buffett became the owner of Berkshire Hathaway - the company he had no future plans with. After taking over Berkshire Hathaway, Warren Buffett continued with Berkshire’s textile business. But he knew the textile industry was in decline and started buying shares of insurance companies. Around the same time, Warren Buffett was growing increasingly fond of the insurance industry — and he started investing in insurance companies. Berkshire Hathaway’s first insurance investment was National Indemnity Company. Later, Warren also invested in GEICO – an investment that paid back Warren Buffett handsomely. And with that, Berkshire Hathaway went from being a textile company to a holding company with investments in the insurance space. Technically, Berkshire was still a textile company. But that changed soon after. Berkshire’s last textile mill shut down in 1985. With that, the company ended its relationship with textiles. The 1970s was a tough period for the US economy as there was a slowdown and the insurance sector wasn’t immune to this. By the 1990s, Berkshire Hathaway had mastered the insurance industry. A majority of their investments were in insurance companies stocks. Warren Buffet steered Berkshire Hathaway in what may be described as a very ‘safe’ manner. Philosophy and Investing It doesn’t take a finance specialist to note, that Berkshire Hathaway stock has given monumental returns. Still, Berkshire Hathaway could have made even higher returns than this had it taken some leverage – if it had borrowed a little money and invested that. It didn’t. Over the decades since Warren’s take over of Berkshire, many new industries have propped up. One of them was tech/internet companies. Warren famously stayed away from tech stocks. His reasoning was simple: he didn’t understand tech very well. Charlie Munger, vice chairman of Berkshire is famous for the saying, “it’s crazy to sweat at night” – indicative of how they’d stay away from investments that would bring them stress. Warren Buffett was never famous for picking stocks that rose astronomically fast. He isn’t famous for sniffing out companies that nobody knows about. What he is actually famous for is investing in stocks with good basics. Warren Buffett through Berkshire Hathaway is the massive name it is today not because he made insane bets. He is a massive name today because he avoided taking too much risk. Warren Buffett is famous for admiring the company Amazon for what it is. But still, he never invested in its early days. Why? Circle of competence. Warren has a rule: stick to what you know. Tech wasn’t one of the things he knew.” Similarly Apple. He stayed away. Warren Buffett was famous for staying away from the stocks of airline companies. He believed they were bad investments. Towards the middle of the 2010s, he started investing in airline stocks. This wasn’t to last though. He got rid of his airline stocks when the pandemic struck in 2020. This was probably an example of Warren breaking his own rule (circle of competence, and suffering. He broke this rule a few years before that too. After maintaining an arm’s length from tech stocks, Warren started buying Apple stocks in the early 2010s. Today, Apple stocks have the highest value of all stocks in Berkshire’s portfolio. An example of how his breaking his own rule gave him a massive payout. Either that or Warren managed to expand his circle of competence to tech businesses. Like any investor, Warren Buffett has made bad investments. But his worst investment is probably Berkshire Hathaway itself. He estimates that he’s lost more than $200 billion in possible gains because he went through with the Berkshire Hathaway takeover. Warren is 92 years old, so questions of who will succeed him have been doing the rounds for many years now. In 2021, Warren Buffett and Charlie Munger announced that Vice Chairman Greg Abel would lead Berkshire Hathaway after Warren Buffett. In the period since Warren Buffett took over in 1965, the S&P 500 index has given a return of around 10% per annum. Over the same time, Berkshire Hathaway stock has given a return of around 20%.
+RBI has increased the interest rate on the government's Floating Rate Bond, 2034, to 7.69% per annum. +India has set a target to double the crude steel production capacity to 300 million tons per annum in the next 9-10 years: PM Modi. +RBI has announced an unscheduled meeting of its Monetary Policy Committee (MPC) on November 3. +The U.S. economy grew at 2.6% from July to September, the first growth seen after 2 quarters of economic contraction. +Eurpean Central Bank hiked rates by 0.75% to 1.5%, the highest since 2009. +DCX Systems IPO will open on Oct 31. The price band is fixed at Rs 197 to 207. +European Union (EU) gave the final approval to the common charger directive. Under this, certain devices will have to use the USB Type-C port for charging. +CCI has imposed a penalty of Rs 936 cr on Google. Markets this week (Above data is Nifty) How markets compare to the previous week's end: |
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