In 1969, Warren Buffett and Charlie Munger redirected their capital away from stripped-down sectors like textiles and retail—seeking businesses with resilience, reliable cash flow, and fulfillment of Berkshire’s long-term vision. That quest led them to the Illinois National Bank of Rockford, run by Eugene Abegg—a vivid character who carried large sums in cash, rented safe deposit boxes at cocktail parties, and even printed his own currency.

This episode explores:

• The backstory behind the acquisition and purchase price dynamics

• The bank’s financial health: assets, equity, ROE, and ROA

• How this marked a strategic pivot for Buffett—away from failing textiles and toward cash-generating, float-rich enterprises like banking and insurance

Read the full issue here: https://open.substack.com/pub/theweekendinvestor/p/becoming-berkshire-1969-part-2-illinois?r=21sroa&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

In 1969, Warren Buffett retired from managing money and dissolved his partnership, shifting his focus more towards Berkshire Hathaway. This decision occurred during a period of significant economic change marked by the onset of "stagflation" and sharp drawdowns for "high-flying go-go stocks", as Buffett found the investing environment increasingly "negative and frustrating" and struggled to find new opportunities that aligned with his investment style. Throughout his partnership, Buffett consistently followed fundamentalist investment principles, focusing on basic value, a margin of safety, and avoiding "glamour stocks" or "concept companies," a disciplined approach that contrasted sharply with the speculative market of the late 1960s.

https://open.substack.com/pub/theweekendinvestor/p/becoming-berkshire-1969-part-1-buffett?r=21sroa&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

1968 was a year of profound upheaval for the United States and Wall Street, marked by assassinations, widespread social unrest, and a "back-office crisis" that overwhelmed manual trading systems. Amidst this national and financial turmoil, Warren Buffett's disciplined partnership delivered an impressive 45% return, significantly outperforming the modest gains of the Dow Jones. This strategic steadfastness was exemplified by Berkshire Hathaway's acquisition of Sun Newspaper and Blacker Printing Company, showcasing Buffett's ability to thrive when the world seemed to be crumbling.

Welcome to episode 11, where we delve into the transformative 1967 acquisition of National Indemnity (NICO) by Berkshire Hathaway for $8.6 million. This pivotal move marked Berkshire's strategic shift from its struggling textile operations, which Warren Buffett was actively shrinking due to mounting costs and competition. The acquisition was fundamentally driven by the significant "float" NICO provided, offering Berkshire valuable, deployable capital and laying the groundwork for its future as a powerful insurance conglomerate.

https://open.substack.com/pub/theweekendinvestor/p/becoming-berkshire-1967-national?r=21sroa&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

Welcome to Becoming Berkshire Episode 10! Today, we're delving into the pivotal year of 1967 for Berkshire Hathaway, a period that marked its transformation into the diversified powerhouse it is today.In 1967, Warren Buffett faced significant challenges in deploying capital. The market environment was changing, with a new generation of money managers emerging, many of whom were far removed from the traumatic experiences of the 1929 Depression. This era saw the rise of figures like Gerald Tsai Jr., known for momentum investing and rapid portfolio turnover, and Fred Carr, a "gunslinger" who preached, "We fall in love with nothing. Every morning, everything is for sale".Buffett found himself increasingly "out of step with present conditions". He noted a sharp diminution in obvious quantitatively based investment bargains and a "hyper-reactive pattern of market behavior" due to a "mushrooming interest in investment performance". His analytical techniques had limited value against this backdrop, and he was skeptical of what he called "fashion" investing, refusing to invest based on anticipating market action rather than business valuations. Furthermore, his capital base had grown to approximately $65 million, making it harder to find suitable investment ideas, and his personal interests dictated a less compulsive approach.It was amidst these challenges that Buffett initiated a profound shift. He began allocating capital outside of the textile business, a decision that would forever change Berkshire's trajectory. The seminal event of 1967 was the acquisition of National Indemnity Company. This strategic purchase was "perhaps the most important event in Berkshire’s history," as it provided a strong platform for future growth and an immediate outlet for the cash freed up from Berkshire’s textile operations.Join us as we explore how these market dynamics, Buffett's changing approach, and this crucial acquisition laid the foundation for Berkshire Hathaway's enduring legacy.
https://open.substack.com/pub/theweekendinvestor/p/becoming-berkshire1967-buffett-and?r=21sroa&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

Welcome to Episode 9 of Becoming Berkshire! As we continue our journey through 1966, a pivotal year for Warren Buffett and Berkshire Hathaway, we're diving deep into one of his most fascinating early investments: his acquisition of 5% of The Walt Disney Company. This period also saw Berkshire Hathaway pay its only dividend of 10 cents per share, signaling Buffett's active exploration of new capital allocation avenues. You'll discover how Buffett's curiosity was piqued by Mary Poppins' theatrical success, leading him to ponder Disney's "Moat" and conduct unconventional due diligence, broadening his definition of "intrinsic value" to include Disney's "off the books" film library.

The year 1966 was marked by a fluctuating stock market, with the Dow Jones Industrial Average briefly breaching the 1,000 mark for the first time before closing significantly lower, while the Buffett Limited Partnership achieved a 20.4% return, outperforming the Dow. During this period, Warren Buffett took control of Berkshire Hathaway and, for the first time, partnered with Charlie Munger on a business venture to acquire the Hochschild, Kohn & Co. department store, an investment that would later be considered a mistake.

https://open.substack.com/pub/theweekendinvestor/p/becoming-berkshire-1966-hochschild?r=21sroa&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

Episode 7 details Warren Buffett's 1965 hostile takeover of Berkshire Hathaway after a tender offer dispute, resulting in his control, chairmanship, and Ken Chace's appointment as president.

https://open.substack.com/pub/theweekendinvestor/p/becoming-berkshire-1965-hostile-takeover?r=21sroa&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false