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  • Writer's pictureIshfaaq Peerally

๐—›๐—ผ๐˜„ ๐˜๐—ผ ๐—บ๐—ฎ๐—ธ๐—ฒ ๐Ÿฑ๐Ÿฌ% ๐—ฎ ๐˜†๐—ฒ๐—ฎ๐—ฟ ๐—ฎ๐—ฐ๐—ฐ๐—ผ๐—ฟ๐—ฑ๐—ถ๐—ป๐—ด ๐˜๐—ผ ๐—ช๐—ฎ๐—ฟ๐—ฟ๐—ฒ๐—ป ๐—•๐˜‚๐—ณ๐—ณ๐—ฒ๐˜๐˜

I recently took a deep dive into Warren Buffett's early partnership letters, a resource that's often overshadowed by his more famous Berkshire Hathaway letters $BRK.B Trust me, these early letters are a goldmine of wisdom, especially for those of us who are still building our investment careers. ๐Ÿ“ˆ

๐™๐™๐™š ๐™๐™ค๐™ช๐™ง ๐˜พ๐™–๐™ฉ๐™š๐™œ๐™ค๐™ง๐™ž๐™š๐™จ ๐™ค๐™› ๐™„๐™ฃ๐™ซ๐™š๐™จ๐™ฉ๐™ข๐™š๐™ฃ๐™ฉ๐™จ

Buffett had a unique way of categorizing his investments into four distinct buckets:

1. Controls: Companies he could gain full control over.

2. Workouts: Special situations like mergers and acquisitions.

3. Private Owner Generals: Deep value investments evaluated as if buying the entire company.

4. Undervalued Generals: Stocks trading below their intrinsic value but not deep value.

๐™ƒ๐™ค๐™ฌ ๐™™๐™ž๐™™ ๐™๐™š ๐™–๐™˜๐™๐™ž๐™š๐™ซ๐™š ๐™–๐™ฃ๐™ฃ๐™ช๐™–๐™ก ๐™ง๐™š๐™ฉ๐™ช๐™ง๐™ฃ๐™จ ๐™ค๐™› ๐Ÿฏ๐Ÿฎ%?

Often the workouts and controls diminished the returns but with the generals he could achieve well over 50%.

The secret lies in a 1968 letter:

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