1972 was an important year for Warren Buffett. It is the year in which he made an investment that was what I consider to be the turning point in his investing career that was inspired by none other than his partner in crime, Charles Munger. Some of you may have already guessed what I’m talking about (perhaps the title gave it away?) – See’s Candy.
This was a company trading at 3x book value and Buffett had likely never paid more than 80% of book value for a company in his life. Yet he saw something new in this investment and was willing to break with all he had known for most of his adult life. I’m going to look at the arguments for these types of businesses that likely persuaded him to do so.