Warren Buffett
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Who says you can’t get really rich when you’re old?
One of the Warren Buffett’s remarkable achievements is that he has generated over 90% of his wealth since he turned 65.
This reflects his approach of “getting rich slow,” which was a response he is said to have given Amazon.com Chairman Jeff Bezos, who asked Buffett how he had achieved such great wealth. “Because nobody wants to get rich slow.”
The 91-year-old Buffett has continued to guide Berkshire Hathaway (ticker: BRK.A and BRK.B)–and work his magic—well past an age when nearly all people retire. It has paid off.
The longtime Berkshire CEO, who took control of the company 57 years ago, now owns a 16% stake—roughly 238,000 class A shares—in the company worth about $128 billion. The stock ended Wednesday with an 0.8% gain, at $536,440, just shy of a record set earlier this week. The class B shares finished at $357.61, up 0.7%.
The stock has been on a roll this year, rising 19%, against a 3% decline in the S&P 500.
Investors like Berkshire as a haven and are excited by Buffett’s recent moves to put some of the company’s nearly $150 billion of cash to work in an $11.6 billion deal for insurer Alleghany (Y) and purchases of about $8 billion of Occidental Petroleum (OXY) stock.
When Buffett reached his 65th birthday in 1995, he held about double his current stake in Berkshire –some 475,000 class A shares. But with the class A stock at around $25,000, the value of his interest was $12 billion.
Consider that in 1995, Berkshire’s value consisted largely of an equity portfolio dominated by stocks like Coca-Cola (KO). Still to come were company’s acquisitions of Burlington Northern Santa Fe and utilities that have become Berkshire Hathaway Energy as well as its purchase of a large stake in Apple
(AAPL). These have been major drivers of Berkshire’s huge appreciation since then.
In 2006, when he was 75, Buffett began giving away Berkshire stock in a systematic way with the largest gifts going to the Bill and Melinda Gates Foundation. He has given $33 billion to the Gates foundation and another $8 billion to other philanthropies, including those headed by his children.
The combined value of those gifts and the Buffett’s current Berkshire stake is around $169 billion. If Buffett hadn’t sold any Berkshire stock since turning 65 he would be worth about $250 billion, which would put him second on the wealth charts to Elon Musk.
Should Buffett have waited to start giving away his Berkshire stock given its large appreciation since 2006?
Buffett discussed his approach to philanthropy and the timing of his gifts in a letter posted last June on Berkshire’s website after making his annual contributions:
“Had I waited until now to give the shares, they would have instead brought $100 billion to the five foundations. The question then becomes: Would society ultimately have benefited more if I had waited longer to distribute the shares? My first wife and I were totally in sync in respect to our philanthropic goals. She, however, favored giving away large sums when we were young—when our net worth was a tiny fraction of its eventual size. I held out for later, remaining charmed by the results of compounding. I was restrained as well by the desire to retain unassailable control of Berkshire. It was only after my wife’s death that I, at 75, stepped on the accelerator.
“Deciding when to switch from building philanthropic-destined funds to depleting them involves a complicated calculation based on the nature of the assets involved, family matters, the seldom confessed instinct to not “let go” and a host of other variables. One size definitely does not fit all.”
Write to Andrew Bary at [email protected]
