Lessons From Warren Buffett

Lessons From Warren Buffett: It Is Easier to Get a Good Price on Piece of a Company Than the Whole Thing

For the vast majority of investors, their holdings represent mere fragments of the corporate landscape, small pieces in a sprawling puzzle. In this realm of small-scale participation, there exists a source of solace. As Warren Buffett sagely observes, take heed that even though your stake may be modest, it has the potential to bear a favorable price tag, one that might surpass the acquisition cost borne by those wielding the means to claim entire companies. So, in this world of fractional ownership, the discerning small investor, with an eye for value, can often secure a more advantageous entry point, savoring a unique advantage amidst the grand tapestry of the market.

“You will never make the kind of buy in a negotiated purchase that you can make via stocks in a weak stock market. It just isn’t going to happen,” Buffett said at the 2019 Berkshire Hathaway annual meeting. “The person on the other side cares too much. Whereas, in the stock market, in a 1973 or 1974, you were dealing with the marginal seller. And whatever price they establish for the business, you could buy it. I couldn’t have bought the entire Washington Post Company for $80 million in 1974. But I could buy 10 percent of it from a bunch of people who were just operating, you know, based on calculating betas or doing something of the sort. And they were in a terrible market. And it was possible to buy a piece of it on that valuation. You never get that kind of buy in a negotiated purchase.”

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© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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