ADVFN Logo

We could not find any results for:
Make sure your spelling is correct or try broadening your search.

Trending Now

Toplists

It looks like you aren't logged in.
Click the button below to log in and view your recent history.

Hot Features

Registration Strip Icon for alerts Register for real-time alerts, custom portfolio, and market movers

Buffett and Munger’s Wesco – the start of the transformation

Share On Facebook
share on Linkedin
Print

Just in the nick of time Buffett, Munger and Koeppel took a large proportion of the money devoted to supporting Wesco’s savings and loan business and made it available for investment elsewhere.

©

Some of that money was sent up the ownership chain. Indeed, by early 1982, almost as much as Blue Chip had paid for its 80% stake had been received from Wesco in the form of dividends – see table. This was put to very good use buying controlling interests and non-controlling interests in some great companies (fascinating stories for me to tell in future Newsletters).

Calendar Year Blue Chip’s average equity in Mutual Savings as carried in Blue Chip’s consolidated balance sheet Blue Chip’s share of the cash dividend paid by Mutual Savings during the year Annual percentage return on Blue Chip’s equity from the Mutual Savings dividend
1975 $11,975,000 $1,932,000 16.1%
1976 $20,570,000 $3,226,000 15.7%
1977 $23,928,000 $3,845,000 16.1%
1978 $25,285,000 $5,287,000 20.9%
1979 $25,630,000 $6,728,000 26.3%
1980 $22,381,000 $9,852,000 44.0%
1981 $18,778,000 $1,922,000 10.2%

Source: Blue Chip stamp chairman and president’s letter, 1981, Charles T. Munger, Chairman of the Board Donald A. Koeppel, President

With the money retained in Wesco, Louis Vincenti did a great job of guiding the rump Mutual Savings business. Munger and Buffett heaped praise on him. As well as getting good returns in the efficient low-cost S&L, he was doing something alien to so many managers; he was gradually shrinking his business, which goes directly against the natural instinct of empire conscious executives. This was all for the sake of greater shareholder returns:

“Louis Vincenti, a chief executive well past normal retirement age, has guided Mutual Savings very………To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

 
Do you want to write for our Newspaper? Get in touch: newspaper@advfn.com