The Acquirer's Multiple: How the Billionaire Contrarians of Deep Value Beat the Market

by Tobias E. Carlisle

The key to Buffett’s change of heart was what happened next. Over the following five years, AmEx traded up to around $185. Its business continued to grow, and Buffett’s hedge fund’s holding grew with it. Buffett sold out when he liquidated the hedge fund in 1969. After five years, the shares were up more than five times. The AmEx investment showed him Munger was onto something. Buffett knew it was worth at least $50 per share if it survived the salad oil crisis. But AmEx’s value was not in its assets; it was in its business. And that business kept growing. Combining a growing business with a bargain price meant great returns that kept going year after year. Munger was right. A good business bought at the right price was the better investment. There would be no more hostile control situations for Buffett. The returns were higher, but the stocks were too small for his growing bankroll. And the companies didn’t grow. Buffett said, “Charlie shoved me in the direction of not just buying bargains, as Ben Graham had taught me. This was the real impact he had on me. It took a powerful force to move me on from Graham’s limiting view. It was the power of Charlie’s mind.”24