Buffett became involved with his now-famous company, Berkshire Hathaway, in 1962.
In 1964, Buffett purchased controlling interest in Berkshire Hathaway, the company he is most closely associated with today.
Berkshire Hathaway had started out as a textile manufacturer in 1839. But, in the early 1960s, American textile companies were losing a lot of business to the cheaper manufacturing markets in Asia and Latin America. So when Buffett began buying its stock in 1962, it was selling at only $7.60 per share. The company was in dire straits.
However, when Buffett did his homework to add up its intrinsic value, he saw that the company should be trading at $16.50 per share. This made Berkshire Hathaway an amazing bargain that he couldn’t pass up, so he bought every stock he could get his hands on and, eventually, became the majority shareholder.
Though it would always struggle as a textile company, it succeeded as a holding company for Buffett’s more successful companies – such as the insurance company National Indemnity Co., which he purchased in 1967 for $8.6 million.
So even though textiles only earned Berkshire around $45,000 in profit per year, its holdings of National Indemnity stock earned it about $2.1 million.
By 1969, Berkshire had become the main focus of his time and energy, and so he decided to dissolve the original Omaha partnership which, over the last 13 years, had increased exponentially in value – from half a million to $104 million.
As chairman of the board at Berkshire Hathaway, Buffett continued to add new companies to its holding and, as a result, the price of Berkshire’s own shares went through the roof – increasing from $7.60 per share in 1962 to $95 per share in 1976!
At this point Buffett was making quite a name for himself, and he was able to do something he always wanted to do – own a newspaper.
In the 1970s, Berkshire became the largest outside shareholder of the Washington Post, the very newspaper Buffett had dropped on people’s doorsteps as a child.
During this time, Buffett continued to pay himself his standard yearly salary of $50,000.