What do you give your friend who has everything for his 90th birthday? If you are Microsoft founder Bill Gates, the world’s second-richest person, you might bake him a cake and share the kitchen video. And what does the sixth wealthiest person on earth — widely regarded as one of the greatest investors of all time — do for his birthday? Berkshire Hathaway’s CEO Warren Buffett was not wasting time with cakes baked by billionaire amateur bakers last weekend. He put out the word that he had just bought 5% stake in each of Japan’s five biggest trading firms or Sogo Shoshas for a cool US$6 billion ($8.17 billion). By mid-week this past week, Berkshire’s stake in the Japanese trading giants had jumped a total of 16% giving him nearly US$1 billion profit on his investment.

Buffett’s rise as the world’s most watched investor is the stuff of legend. In 1942, the 11-year-old scion of an Omaha business family which ran one of the town’s main grocery stores made his first stock purchase — six shares of Cities Service, at US$38 a share — for himself and his sister and sold them for US$40. In his freshman year at Columbia University, 19-year-old Buffett had a portfolio of stocks worth US$10,000. He made his first million soon after he turned 30. In 1965, he took control of struggling textile manufacturer Berkshire Hathaway and turned it into the world’s most storied investment firm. US$1 invested in Berkshire stock when he took control of it would be worth US$27,300 today. A similar investment in benchmark S&P 500 index would have grown to US$198.

Berkshire’s CEO learned his craft from Columbia University economics professor Benjamin Graham, also known as “the father of value investing”. “Buffett has always been good at visualising what others are often afraid to see,” Bill Smead, a veteran value investor and CEO of Smead Capital in Phoenix told The Edge Singapore in a recent phone interview. In 1988, just months before the fall of the Berlin Wall, Berkshire bought over a US$1 billion of Coca-Cola stock, he recalls, at 18 times earnings. “He thought people all over the world who didn’t have access to Coke before would want it,” Smead says. “Great wealth is created when you buy a stock that is out of favour or see something that no one sees,” he says.

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