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Warren Edward Buffett (born August 30, 1930) is a wealthy American investor and businessman.
Nicknamed the "Oracle of Omaha", Buffett has amassed a substantial fortune from astute investments through his company
Berkshire Hathaway, of which he holds 38%. With an estimated
net worth of $42.9 billion as of 2004, he is ranked by Forbes as the second-richest person in the world behind Bill Gates.
Buffett customarily focuses his investments in undervalued companies with good long term growth potential. Identifying such
companies is the difficult part. The actual value generated is more by the companies he owns than stock market investments,
although his stock ownership in companies such as Coca-Cola and Gillette attracts more attention. Buffett famously avoids high-tech companies, not because
they are inherently less desirable, but because he prefers businesses he understands.
Buffett also owns insurance companies like Geico and General Re that generate a large free cash flow. These companies are a source of funds that he then allocates to
Berkshire Hathaway's subsidiaries and uses to acquire new companies.
Buffett was born in Omaha, Nebraska. His father was a
stockbroker and a Congressman. Buffett was educated at the University of Nebraska (transferring there from the Wharton School of Finance and Commerce,
University of Pennsylvania) and took a masters in economics at Columbia University, studying under Benjamin
Graham. He went on to work for Graham at Graham-Newman where he followed Graham's value investing rules. Buffett
returned to Omaha in 1957 and started his own investment partnership, putting in his own money and raising additional investments
from friends and family. By 1969 he had returned an average of almost 30% a year, in a market where 7% to 11% is the norm and
anything more is outstanding. Under Buffett's direction, Berkshire has outperformed market benchmarks such as the S&P 500 and the Dow Jones Industrial Average for over forty years.
One of his earliest investments was in American Express. Among
the companies he invested in was Berkshire Hathaway, a New Bedford textile company. Buffett sold his investment but kept the name and turned the shell
of the company into a investment business, notably in the insurance field which generated a steady cash flow for further
investment. As of 2003, Berkshire Hathaway owns around forty companies that employ 150,000 people.
He married Susan Thompson in 1952. They separated in 1977 but remain married. She is a significant stock-holder in Berkshire
Hathaway and a board member. Buffett lives with Astrid Menks while his wife resides in San Francisco. He has three children.
In terms of his personal life he is famously frugal. Through the Buffett Foundation he makes charitable donations, usually
around $12 million a year in total. He has stated his intention to disburse 99% of his wealth after his death to good causes.
Mr. Buffett drives his own Cadillac.
His main business aide is Charlie Munger, once a lawyer with Munger, Tolles and Olson and now CEO of Berkshire Hathaway subsidiary
Wesco Financial and
vice-chairman of Berkshire Hathaway. It is believed he will succeed Buffett along with Geico's CEO Lou
Simpson.
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