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But luckily for Berkshire Hathaway shareholders he did.

In fact, he almost didn’t buy this company. The business was available at an attractive price, albeit it didn’t’ seem that way to Buffett at the time. There was some untapped pricing power, which allowed Buffett to raise prices without affecting sales of the product. There was a stable annual demand for its product, which grew slowly, but sales were consistent. The business had a strong brand recognition in the West Coast, particularly California. Buffett calls See’s Candy his “Dream Business” Perhaps the best example of a quality business that Buffett bought was See’s Candy in 1972. We would never know, but the focus on purchasing quality businesses transformed him as an investor and put him on the map. Buffett learned the value of investing in quality companies perhaps by accident, perhaps due to his observations or perhaps due to the influence of his long-term business partner Charlie Munger. He was able to pivot into investing in quality companies, which seemed optically expensive, but were really compounding machines. It was difficult to find cheap companies by the late 1960s however, and his asset size was very large, which meant that he had to learn a new method to compound his net worth. These were the cigar butt type companies, where he would buy low and sell high, rinse and repeat. That was during the 1950s and 1960s, the days of his Buffett Partnership. He is a learning machine.įor example, Buffett started investing in companies that were selling at a portion of their asset values and in merger arbitrage situations. He has been able to successfully adapt to a variety of conditions, and apply his knowledge in a way that continues to compound his capital.

Buffett himself is someone who has worked very hard for decades, spending 70 hours/week studying business, strategy, investing and learning from his mistakes.