Warren Buffett, Benjamin Graham, and GEICO; Growth Story



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One of Warren Buffett’s, and Benjamin Graham’s best investments, GEICO, was a growth stock! How ironic that two “value investors” invested in a growth company. The blog, Base Hit Investing, explained that “Graham invested nearly 25% of his partner’s capital into GEICO in 1948, acquiring 50% of the growing enterprise for the small sum of just $712,000. This would eventually grow to over $400 million 25 years later!! … a 500-bagger”. Warren would increasingly evolve away from his value investing roots, with Charlie Munger’s influence, and Benjamin would later admit that he was “no longer an advocate of elaborate techniques of Security Analysis in order to find superior value opportunities. This was a rewarding activity, say, 40 years ago, when our textbook ‘Graham and Dodd’ was first published; but the situation has changed a great deal since then”.

Photo: (Warren Buffett (far left) and Ben Graham (third from left)


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