42 THE WARREN BUFFETT WAY
available at attractive prices. This owner-oriented way of looking at po-
tential investments is bedrock to Buffett’s approach.
Because he operates from this owner’s perspective, wherein buying
stock is the same as buying companies, it is also true that buying com-
panies is the same as buying stock. The same principles apply in both
cases, and therefore both hold important lessons for us.
Those principles are described in some detail in Chapters 5 through
- Collectively, they make up what I have called the “Warren Buffett
Way,” and they are applied, almost subconsciously, every time he consid-
ers buying shares of a company, or acquiring the entire company. In this
chapter, we take a brief background tour of some of these purchases, so
that we may better understand the lessons they offer.
A MOSAIC OF MANY BUSINESSES
Berkshire Hathaway, Inc., as it exists today, is best understood as a
holding company. In addition to the insurance companies, it also owns
a newspaper, a candy company, an ice cream/hamburger chain, an en-
cyclopedia publisher, several furniture stores, a maker of Western boots,
jewelry stores, a supplier of custom picture framing material, a paint
company, a company that manufactures and distributes uniforms, a vac-
uum cleaner business, a public utility, a couple of shoe companies, and
a household name in underwear—among others.
Some of these companies, particularly the more recent acquisitions,
are jewels that Buffett found in a typically Buffett-like way: He adver-
tised for them in the Berkshire Hathaway annual reports.
His criteria are straightforward: a simple, understandable business
with consistent earning power, good return on equity, little debt, and
All we want is to be in businesses that we understand, run by
people whom we like, and priced attractively relative to their
future prospects.^1
WARRENBUFFETT, 1994