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Warren Buffett opens his mail. A letter from Berkshire Hathaway offers 12 cents a share less than the price he says they agreed. He had bought into its old textile mills to sell the shares back at a small profit. He'd later compare buying that stock to picking up a discarded cigar butt with one puff left in it.
This offer was the puff, my free puff just waiting for me, as he'd put it. I had expected the letter he'd write. I was surprised by the price. If the letter had said 11 and a half, he says he would have sold, but this made me mad. He doesn't sell. He bristled, he'd write, and ignored the offer. Instead, he starts buying more Birkshire shares aggressively, but it is, in his own words, a terrible business, and it keeps closing one mill after another.
Nearly everything he owns sits in the partnership that is doing the buying. A year later, Buffett's anger would come to a head at a board meeting. Weeks before the letter, Buffett had gone to see the man who ran Birkshshire, Cabberry Stanton. In Buffett's telling, Stanton looked at him and said the company had just sold some mills, had money to spare, and wanted to know what price Buffett would sell his shares for.
Buffett answered, "1150." Stanton asked him to promise. Buffett says he told him, "Mr. Stanton, you have my word." Years later, in a letter, he'd remember Stanton's reply another way. "Fine, we have a deal." Then the letter came in an eighth of a dollar lower. Across his partnership's whole stake, that ETH came to about $14,000.
Over that sum, he turned down for 50% above what he had first paid. Stanton's company had once been the giant of New England textiles. Since then, Buffett wrote, it had closed nine plants, sometimes using the money to buy back shares. That November, Stanton and the company's chairman signed its yearly report to stockholders.
The difficult years, they wrote, were ones which we believe have now been completed. They expected a profitable year, but by the spring, Buffett would be paying well above the price he had turned down. By his own count, after very heavy buying in early 1965, his Berkshire shares cost him nearly $15 each on average.
The eighth he refused was getting expensive. At a board meeting in early May 1965, a year after the letter, Buffett's side formally took control of the company and Seabberry Stanton resigned as president. Buffett tells it more bluntly. I bought control of the company and fired Mr. Stanton. His son, the company's treasurer, resigned, too.
The new president was Ken Chase, a vice president who had worked there for years. Buffett blames them both in his own words. Seabbze and my childish behavior. After all, he wrote, "What was an eighth of a point to either of us? I became the dog who caught the car." At first, the dog was pleased with its car.
That July, he told his partners he was delighted with the price he had paid and with the business, and even happier with the people running it. Two good years followed, and the profits came in free of income tax. But Charlie Munger, Buffett says, spotted his obvious error immediately. The price looked cheap, but the business was headed for extinction.
Early in 1967, Buffett would take money the mills had made and buy an insurance company, National Indemnity. But then, as Buffett puts it, the honeymoon ended. For 18 years after 1966, he wrote, "They struggled with the textile business, all to no avail. Still, the mill kept sending him plans for new machines.
By this one, a plan would say, "And we'll save 14 people." Saving people meant needing fewer workers. Buffett says, "I kept putting it in my drawer." He says of Ken Chase, "Honest and able, hardworking, and he couldn't make it go. So why keep the looms running?" In his letters, the first reason he gave was the towns.
The mills were very important employers in their communities. He says, "I figured it out fairly soon, but I just kept thinking, I'm not going to give up on this." Instead of quitting, he bought a second mill called Wombbeck. Years later, he asked his own shareholders, "Can you believe that in 1975 I bought Wombbeck Mills, another New England textile company?" In his words, "It was a disaster." In July 1985, Buffett made the call he had put off for 20 years.
He had tried to sell the business to someone who would keep it running. He wrote, "Interest was nil, so the mills shut. And by the end of 1985, that unpleasant job was largely done." Of the workers, he wrote that they tried just as hard as we did. Even during our liquidation period, they performed superbly, and of himself.
I should be faulted for not quitting sooner. Then the mills machinery went up for auction. relatively modern looms bought in 1981 for $5,000 a piece went for scrap. Each one fetched $26. That, he wrote, was less than it cost to haul them away. A quarter century later, Buffett would tell a TV interviewer what that eighth of a dollar had cost by his own count.
The dumbest stock I ever bought, he told the interviewer, Becky Quick, was drum roll here, Berkshire Hathaway. Then, and here it is, a tender offer from Burkshire Hathaway. That's from 1964. He asked her to look carefully at the price. He chiseled me for an eighth. Then he put a number on the mistake.
If he had skipped the mill and started with the insurance company, he said, Burkshshire would be worth twice as much. This is $200 billion. His advice from all of it. If you get in a lousy business, get out of it. 3 years later, the old Berkshire Hathaway mill building in New Bedford was up for sale.
Its owner emailed Buffett to say it was available. Buffett wasn't interested. He said, "I don't know what you'd do with that place." In January 2014, the mill that started it all was torn down. A year later, he called refusing Stanton's offer a monumentally stupid decision, but the company kept the mill's name.
In August 2024, Berkshire Haway became the first American company outside tech worth the trillion dollars. That same year, it paid the IRS more in corporate income tax than the US government had ever received from any company. But early the next year, he wrote that taking control had been a mistake.
My mistake. That May in an Omaha arena, Buffett would surprise even the man sitting next to him on stage. It was 3 May 2025 at the question session before Burkshire's annual meeting in front of thousands of investors. I think the time has arrived where Greg should become the chief executive officer of the company at year end.
Greg Ael sitting beside him had not known it was coming. The arena gave Buffett a long-standing ovation and Abel the man he had just named stood up with the crowd to applaud his boss. That November he wrote to shareholders that he was going quiet. On one January 2026, Abel took over as chief executive.
He wrote, "Warren is obviously a very hard act to follow. In September 2026, Buffett stepped back again. At 96, he became chairman emeritus, still on the board, and his son Howard became chairman. Over an eighth of a dollar, Warren Buffett bought a dying mill, fought it for 20 years, and called it his own mistake.
He kept its mills going partly for the towns, and he never blamed the workers. But the mill's name is the name on everything he built. He wrote that September, "Father time always wins." He has, however, been generous with me. Leit Modi founded the IPL and in 2025 an island nation's prime minister ordered his passport cancelled. That story comes next and one of our older ones is up on your screen now.
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