More Praise for The Warren Buffett Way, First Edition

Cuming County Demo-
crat,
a weekly newspaper in West Point, Nebraska. His grandmother
helped out at the paper and also set the type at the family’s printing shop.
His father, while attending the University of Nebraska, edited the 
Daily
Nebraskan.
Buffett himself was once the circulation manager for the
Lincoln Journal.
It has often been said that if Buffett had not embarked
on a business career, he most surely would have pursued journalism.
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C A S E I N P O I N T
B
E N J A M I N
M
O O R E
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In November 2000, Warren Buffett and Berkshire Hathaway
paid about $1 billion for Benjamin Moore & Co., the Mercedes
of paint companies. Founded in 1883 by the Moore brothers in
their Brooklyn basement, Benjamin Moore today is f ifth largest
paint manufacturer in the United States and has an unmatched
reputation for quality.
It was reported that Buffett paid a 25 percent premium over
the stock’s then current price. On the surface, that might seem
to contradict one of Buffett’s iron-clad rules: that he will act
only when the price is low enough to constitute a margin of
safety. However, we also know that Buffett is not afraid to pay
for quality. Even more revealing, the stock price jumped 50
percent to $37.62 per share after the deal was announced. This
tells us that either Buffett found yet another company that was
undervalued or else that the rest of the investing world was bet-
ting on Buffett’s acumen and traded the price up even higher—
or both.
Benjamin Moore is just the sort of company Buffett likes.
The paint business is nothing if not simple and easy to under-
stand. One of the largest paint manufacturers in the United
States and the tenth largest specialty paint producer, Benjamin
Moore makes one of the f inest, if not 
the
f inest, architectural
paint in the United States. The company is not just famous for
the quality of its paint, however; architects, designers, and
builders regard Benjamin Moore colors as the gold standard for
their industry. In fact, the company developed the f irst com-
puterized color matching system, and it is still recognized as the
industry standard. With roughly 3,200 colors, Benjamin Moore
can match almost any shade.
Buffett also tends to buy companies that have a consistent
operating history and as a result, upon buying a company, he
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does not expect to have to change much. His modus operandi is
to buy companies that are already successful and still have po-
tential for growth. Benjamin Moore’s current success and status
in the marketplace over the decades speak to the company’s
consistent product quality, production, brand strength, and ser-
vice. Now, 121 years after its founding, the company brings in
about $80 million of prof it on $900 million in sales.
Looking at Benjamin Moore, Buffett also saw a well-run
company. Although there were questions a few years ago about
Moore’s retail strategy, the company has undertaken a brand re-
juvenation program in the United States and Canada. Benjamin
Moore increased its retail presence in independent stores with its
Signature Store Program and bought certain retail stores, such as
Manhattan-based Janovic, outright. Just before the Berkshire ac-
quisition in 2000, the company underwent a cost-cutting and
streamlining program to improve its operations.
All that adds up to favorable long-term prospects. Benjamin
Moore is a classic example of a company that has turned a com-
modity into a franchise. Buffett’s definition of a franchise is one
where the product is needed or desired, has no close substitute,
and is unregulated. Most people in the building industry would
agree that Moore is a master in all three categories. Considering
the company’s arsenal of over 100 chemists, chemical engineers,
technicians, and support staff that maintain the company’s strict
product standards and develop new products, the risk of Ben-
jamin Moore paints becoming a perishable commodity is slight.
The on-going and rigorous testing to which all the Moore
products are subjected is a sign that Benjamin Moore will con-
tinue to set industry standards. Finally, although Benjamin
Moore products are not cheap, their quality commands pricing
power that defeats any notion of inf lation.

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I n v e s t i n g G u i d e l i n e s : B u s i n e s s Te n e t s
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In 1969, Buffett bought his first major newspaper, the