Warren Buffett's Investment Journey: From Apple Billions to Shoe Deal Disaster
A look back at the Berkshire Hathaway chairman's most impactful investments and his most costly misstep.
Warren Buffett's six-decade tenure leading Berkshire Hathaway has yielded extraordinary returns for investors, with the company's shares appreciating over 6,000,000% since 1965, vastly outperforming the S&P 500. Buffett attributes this success to a select number of pivotal decisions.
Landmark Investments
Apple
Buffett's long-held aversion to technology stocks shifted with Apple. Berkshire Hathaway began acquiring shares in 2016, investing an initial $1 billion when concerns about slowing sales had impacted the company's stock. Buffett recognized Apple's strong customer loyalty and recurring revenue potential. Berkshire progressively increased its stake, investing $36 billion between 2016 and 2018. By the end of 2023, this investment had grown to over $174 billion, becoming Berkshire's largest disclosed stock position.
American Express
In 1963, American Express faced a significant crisis due to the Salad Oil Scandal. Despite the stock's plunge, Buffett invested approximately $13 million, betting on the company's enduring customer loyalty. This investment proved highly successful, with Berkshire Hathaway's stake eventually valued between $46 and $56 billion, illustrating Buffett's ability to look beyond market panic.
Coca-Cola
Berkshire Hathaway began building its position in Coca-Cola in 1988, investing about $1.3 billion. This investment was made after the company had recovered from the disastrous 'New Coke' product launch in 1985, which highlighted consumer attachment to the brand. The Coca-Cola holding became a cornerstone of Berkshire's portfolio, generating billions in value and dividends over decades.
Insurance Businesses and GEICO
In 1967, Buffett acquired National Indemnity and National Fire & Marine, recognizing the value of insurance 'float'—premiums collected upfront that can be invested. This strategy transformed Berkshire Hathaway. He had also invested in GEICO in 1976 during its financial difficulties, eventually taking full control in 1996. GEICO became a highly profitable business for Berkshire.
See's Candies
Pushed by his partner Charles Munger, Buffett purchased See's Candies in 1972 for $25 million. Initially hesitant about the price, he came to value the company's strong brand loyalty and its ability to raise prices without losing customers. See's Candies generated significant cash flow for Berkshire and taught Buffett the importance of acquiring exceptional businesses at reasonable prices.
The Costliest Mistake: Dexter Shoe Co.
Buffett has identified the acquisition of Dexter Shoe Co. in 1993 as his most significant error. Berkshire paid $433 million for the footwear manufacturer, not with cash, but with Berkshire Class A shares. The company ultimately failed due to foreign competition. By 2014, the Berkshire shares given away to acquire Dexter had appreciated to an estimated $5.7 billion, far exceeding the initial purchase price and representing a substantial loss of potential compounding value.
Buffett is reportedly preparing to hand over the reins of Berkshire Hathaway to his son, Howard Buffett, after more than six decades at the helm.