Powerful ideas from top nonfiction
Try Blinkist to get the key ideas from 7,500+ bestselling nonfiction titles and podcasts. Listen or read in just 15 minutes.
Get started
Blink 3 of 8 - The 5 AM Club
by Robin Sharma
Buffett's Early Investments summary
Listen to the Intro
Buffett's Early Investments summary
Brett Gardner
A new investigation into the decades when Warren Buffett earned his best returns
17 mins
Brief summary
Buffett's Early Investments delves into Warren Buffett's initial forays into investing, providing insights into his formative strategies and decision-making processes. The book illustrates foundational practices that contributed to his long-term success.
Topics
Table of Contents
Buffett's Early Investments
Summary of 5 key ideas
Audio & text in the Blinkist app
Key idea 1 of 5
1951: Greif Bros.
In the 1900s, Greif Bros. called itself “The largest cooperage factory in the world.” What’s cooperage, you ask? It’s the manufacturing of wooden barrels. And if you’ve never heard of cooperage before, that’s not surprising: in the twenty-first century, the market for wooden barrels isn’t enormous. But even in 1951, when Warren Buffet pitched his father’s investment firm Buffet-Falk & Co. on buying up Greif Bros. stock, cooperage was an industry in decline.
So what did the 21-year-old Buffett see in this seemingly unexciting company? He saw a classic net-net opportunity.
A “net-net” investment occurs when a company trades below net current asset value – meaning the company’s current liquid assets minus liabilities. This approach identifies companies selling for less than their liquidation value. Buffet would later call these “cigar butt investments.” A cigar butt in the gutter might only have one puff left, but that puff is free.
Greif Bros. fit this profile perfectly. The company had a net current asset value of $20.47 per share – representing what would remain if the business paid off all debts using just current assets. The company’s tangible book value – the theoretical amount if all physical assets were sold and debts paid – stood at $39.60 per share. The market significantly undervalued these assets. Greif Bros. shares were priced at $18.25 – representing a slight discount to net current assets and a 54 percent discount to tangible book value.
What made Greif Bros. particularly interesting was its asset composition. The company owned 239 manufacturing plants and 11 divisional offices. Much of its inventory was wood, likely to hold value over time. What’s more, in the 1940s, Greif Bros. had switched to LIFO accounting, or Last-In, First-Out accounting. This assumes that the most recently added inventory items are the first ones sold. This approach typically understates inventory value, meaning Greif’s true asset value was likely even higher than the already attractive book value suggested.
To Buffet, this investment offered substantial downside protection: thanks to its asset value the company would likely fetch more in liquidation than its market price. But there’s an interesting postscript: unlike many net-net investments, Greif Inc. didn’t go under. The company is now a leader in industrial packaging solutions, with a $3.4 billion market capitalization as of 2023. Buffet’s early identification of value in Greif. Bros foreshadowed his eventual instinct for finding and investing in companies with adaptable business models and durable competitive advantages.
Want to see all full key ideas from Buffett's Early Investments?
Key ideas in Buffett's Early Investments
More knowledge in less time
Read or listen
Get the key ideas from nonfiction bestsellers in minutes, not hours.
Find your next read
Get book lists curated by experts and personalized recommendations.
Shortcasts New
We’ve teamed up with podcast creators to bring you key insights from podcasts.
What is Buffett's Early Investments about?
Buffett’s Early Investments (2024) investigates some of Warren Buffett’s formative early investments, uncovering the unique insights that drove his decisions and made him his first millions. It provides a fascinating behind-the-scenes look at some of the most significant investments in business history.
Who should read Buffett's Early Investments?
- New investors ready to learn from an investing genius
- Finance professionals who want strategic insights into Buffet’s investing style
- Buffet fans keen to learn about his understudied early years
Categories with Buffett's Early Investments
Book summaries like Buffett's Early Investments
People ❤️ Blinkist
Sven O.
It's highly addictive to get core insights on personally relevant topics without repetition or triviality. Added to that the apps ability to suggest kindred interests opens up a foundation of knowledge.
Thi Viet Quynh N.
Great app. Good selection of book summaries you can read or listen to while commuting. Instead of scrolling through your social media news feed, this is a much better way to spend your spare time in my opinion.
Jonathan A.
Life changing. The concept of being able to grasp a book's main point in such a short time truly opens multiple opportunities to grow every area of your life at a faster rate.
Renee D.
Great app. Addicting. Perfect for wait times, morning coffee, evening before bed. Extremely well written, thorough, easy to use.
People also liked these summaries
4.7 Stars
Average ratings on iOS and Google Play
37 Million
Downloads on all platforms
10+ years
Experience igniting personal growth