Buffett's Early Investments: A New Investigation into the Years of the Investor's Highest Returns

Vyacheslav Dvornikov

Feb 17, 2025

For his debut book titled "Buffett's Early Investments: A New Investigation of the Decades When Warren Buffett Achieved His Highest Returns," released in November 2024, Brett Gardner, who was an analyst at various investment companies, studied in detail Warren Buffett's investments in 10 companies, including American Express and Walt Disney. All of them were made between 1950 and 1966. The author carefully examines the formative years of Buffett's career and the key factors that contributed to his success. 

The book discusses 10 companies, and Gardner analyzed each of them using only the financial information that was available to Buffett before he bought them. The author searched for and studied annual reports published decades ago, analyst research, annual financial performance directories from Moody's, and other often little-known sources. 

In addition, the book includes never-before-covered materials, such as Buffett's letter to Ben Graham about the annual reports of Greif and Hochschild Kohn companies.

Gardner's research reveals Buffett's approach. He went beyond traditional metrics in search of quality businesses and paid attention to things like brand strength and positioning. This was long before it became a standard approach in value stock investing, notes the Financial Times. 

"Anyone who analyzed the same stocks as Buffett could say they were cheap," writes Gardner about Marshall-Wells. But not many, like Buffett, analyzed the stocks of a Duluth, Minnesota hardware wholesaler. 

The book shows Buffett's diligence, patience, and willingness to make big bets, notes Wall Street Journal columnist Jason Zweig. Buffett, decades before becoming a famous investor, visited company headquarters and bombarded their management with questions. For example, he once showed up at the production of Greif Bros., a manufacturer of barrels and containers, and spent several hours asking a regular employee about barrels.

In 1964, a scandal erupted involving a subsidiary of American Express in the storage of vegetable oil. Buffett and his assistant visited countless restaurants, hotels, and retail stores to ensure that the demand for Amex traveler's checks and credit cards was not affected.

Union Street Railway shares changed hands so rarely that Buffett had to place an ad in the local New Bedford, Massachusetts newspaper, offering local shareholders to sell him shares. It took him more than two years to buy a significant amount of them.

Another of the most important components of Buffett's early success was courage and willingness to make large bets. As Gardner writes, "great investment ideas are rare; Buffett seized them whenever he discovered them." In 1950, he invested about a quarter of the assets of Buffett's investment partnership in Marshall-Wells. By 1951, more than half of the portfolio was in the insurer Geico. By 1966, the stake in American Express had grown to nearly 40% of all assets.

Why This Matters

Can anyone today do what Buffett did back then? This question is posed by Wall Street Journal columnist Jason Zweig, who edited the updated edition of Benjamin Graham's classic book "The Intelligent Investor." Buffett called it "by far the best book on investing ever written." In some ways, it should be even easier, as information is now publicly available. But in many ways, it is much more difficult. Markets are much more efficient, lucrative deals have virtually disappeared, and everyone "wants to fish" in the same places, notes Zweig.

In response to Zweig's request to comment on the lessons investors can learn from the book, Buffett replied that he would do so at the annual Berkshire Hathaway shareholders meeting. It is scheduled for May 3, 2025.