The Digest #185
Capital Allocation, Progressive's strategy, Reading plans, Damodaran's free courses, Looking back at Alibaba's IPO, Chris Davis, Outsider CEOs, Shareholder activists, Oprah, and more ...
Anyone who is interested in Berkshire Hathaway should read Jacob McDonough’s book, Capital Allocation: The Financials of a New England Textile Mill. The book covers Berkshire’s history from 1955 to 1985. By providing a decade of history prior to Warren Buffett assuming control in 1965, we can see how Berkshire performed as a textile company before it was transformed over the subsequent two decades. Jacob recently announced that he has made a PDF of the book available for free.
Here is an excerpt from a review of the book that I published in 2020:
Jacob McDonough’s book attempts to analyze Berkshire from 1955 to 1985 through the eyes of an investor who was examining financial statements during those years.
As McDonough states at the outset, he wrote the book for practitioners who are interested in analyzing the financial statements of Berkshire Hathaway during its early years in an attempt to study what Buffett saw at the time and how he transformed the business. The book emphasizes the numbers from Berkshire’s financial statements along with McDonough’s analysis of the sources and uses of cash flow. Extensive notes demonstrate that McDonough obtained and studied all of Berkshire’s early financial statements. These documents pre-date the SEC’s Edgar system and are not widely available on the internet.
For many Berkshire shareholders, this might be the first time that they have had the opportunity to examine Berkshire’s early financial statements.
I highly encourage everyone to check out the PDF of the book or, better yet, to purchase a printed copy. My full review is available below:
In the video below, Jacob McDonough discusses his book with Geoff Gannon and Andrew Kuhn on a Focused Compounding podcast:
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Will Progressive's Growth Strategy Pay Off?, July 15, 2023. The auto insurer continues to add customers but posted disappointing results in the second quarter of 2023 due to catastrophe losses and inadequate pricing. In this article, I describe the company’s Q2 results as well as comment on its ongoing competition with GEICO.
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Reading Plans, January 15, 2024. I published this article earlier this week. It provides a description of three sets of books I recently purchased along with my future reading plans. “The Great Books cast a formidable shadow but most of them were meant to be read by a wide audience. Reading plans make it easier to get started.” (Great Books Journal), January 11, 2024. Every year, Professor Damodaran generously makes his classes available for free. This is a great opportunity for students of limited means to gain knowledge that normally costs thousands of dollars. He offers the classes in three formats, as shown in the following exhibit appearing in his article. I also recommend Professor Damodaran’s second data update article for 2024. (Musings on Markets), January 12, 2024. Kingswell begins a slow read of the new edition of Poor Charlie’s Almanack starting with this issue. I am still waiting for my hard copy of the book but fortunately it is available for free on Stripe’s website. I’d also recommend Kingswell’s recent article on Chris Davis. (Kingswell)