Buffett was born in Omaha, Nebraska, to Howard Buffett, a stockbroker and United States Representative, and Leila Buffett. Buffett has two sisters, Doris and Bertie. His grandfather owned a grocery store in Omaha, where Charlie Munger, the current Vice Chairman of Berkshire Hathaway, once worked.

Buffett has had an entrepreneurial spirit since his early years. He began working at his father’s brokerage at the age of 11, and that same year made his first stock purchase, buying Cities Services preferred shares for $38 each. He sold them when the price reached $40, only to see them rocket to $200 a few years later. This taught him the importance of investing in good companies for the long term. At the age of 14 he spent $1,200 he had saved up from two paper routes to buy 40 acres of farmland which he then rented to tenant farmers.

He initially attended the Wharton School at the University of Pennsylvania, then transferred to the University of Nebraska. There he began his interest in investing after reading Benjamin Graham’s The Intelligent Investor. He obtained a Master’s degree in economics in 1951 at Columbia Business School, studying under Benjamin Graham, alongside other future value investors including Walter Schloss and Irving Kahn. Another influence on Buffett’s investment philosophy was the well known investor and writer Philip Fisher. After receiving the only A+ Benjamin Graham ever handed out to a student in his security analysis class, Buffett wanted to work at Graham-Newman but was initially turned down. He went to work at his father’s brokerage as a salesman until Graham offered him a position in 1954. Buffett returned to Omaha two years later, when Graham retired.

Buffett established Buffett Associates, Ltd., his first investment partnership, in 1956.[7] It was financed by $100 from Buffett, the general partner, and $105,000 from seven limited partners consisting of Buffett’s family and friends. Buffett created several additional partnerships which were later consolidated as Buffett Partnership Limited. He ran the partnerships out of his bedroom, adhering closely to Graham’s investment approach and compensation structure. These investments made in excess of 30% compounded annually between 1956 to 1969, in a market where 7% to 11% was the norm. Buffett employed a three-pronged approach:

1. Generals: undervalued securities that possess margin of safety and meet expected return-to-risk characteristics
2. Arbitrages: company events that are not related to broader market changes, such as mergers and acquisitions, liquidation, etc.
3. Controls: build sizeable holdings, ally with other shareholders or employ proxies to effect changes in companies

Buffett Partnerships established in 1962 a position in Berkshire Hathaway, a large manufacturing company in the declining textile industry that was selling below its working capital. Buffett would dissolve all partnerships to focus on running Berkshire Hathaway. Charlie Munger, Berkshire’s current Vice Chairman, at the time remarked that purchasing the company was a mistake, due to the failure of the textile industry. Berkshire, however, became one of the largest holding companies in the world. The company kept the Berkshire name as a reminder that buying companies based on value alone does not guarantee a good investment. Buffett redirected the cash not required to maintain the textile business to acquire private businesses and stocks of public companies. At the core of his strategy was to purchase or build insurance or reinsurance companies and use them as super margin accounts to buy equities. Berkshire chooses managers who demonstrated unwavering underwriting discipline and cost consciousness throughout their careers. To align the interest with Berkshire shareholders, insurance managers are compensated for underwriting profit and not for meeting revenue growth targets.

biography courtesy of Wikipedia.org