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He calls his 1964 decision to buy the textile company a $200 billion dollar blunder, sparked by a spiteful urge to retaliate against the CEO who tried to “chisel” Buffett out of an eighth of a point on a tender deal.

Buffett tells the story in response to a question from CNBC’s Becky Quick for a Squawk Box series on the biggest self-admitted mistakes by some of the world’s most successful investors.

COMPLETE CNBC INTERVIEW VIDEO AND TRANSCRIPT

Buffett tells Becky that his holding company (presumably with a different name) would be “worth twice as much as it is now” — another $200 billion — if he had bought a good insurance company instead of dumping so much money into the dying textile business.

Here’s his story, as it appeared this morning in edited form on Squawk Box:

BUFFETT: The— the dumbest stock I ever bought— was— drum roll here— Berkshire Hathaway. And— that may require a bit of explanation. It was early in— 1962, and I was running a small partnership, about seven million. they call it a hedge fund now.

And here was this cheap stock, cheap by working capital standards or so. but it was a stock in a— in a textile company that had been going downhill for years. So it was a huge company originally, and they kept closing one mill after another. and every time they would close a mill, they would— take the proceeds and they would buy in their stock. and I figured they were gonna close, they only had a few mills left, but that they would close another one. I’d buy the stock. I’d tender it to them and make a small profit.

So I started buying the stock. and in 1964, we had quite a bit of stock. and I went back and visited the management, mr. (Seabury) Stanton. and he looked at me and he said, ‘Mr. Buffett. We’ve just sold some mills. We got some excess money. We’re gonna have a tender offer. and at what price will you tender your stock?’

And I said, ‘11.50.’ and he said, ‘Do you promise me that you’ll tender it 11.50?’ and I said, ‘Mr. Stanton, you have my word that if you do it here in the near future, that I will sell my stock to— at 11.50.’ I went back to Omaha. and a few weeks later, I opened the mail—

BECKY: oh, you have this?

BUFFETT: and here it is: a tender offer from Berkshire Hathaway— that’s from 1964. and if you look carefully, you’ll see the price is—

BUFFETT: —11 and three-eighths. He chiseled me for an eighth. and if that letter had come through with 11 and a half, I would have tendered my stock. but this made me mad. So I went out and started buying the stock, and I bought control of the company, and fired mr. Stanton. (LAUGHTER)

Now, that sounds like a great little morality table— tale at this point. but the truth is I had now committed a major amount of money to a terrible business. and Berkshire Hathaway became the base for everything pretty much that I’ve done since. So in 1967, when a good insurance company came along, I bought it for Berkshire Hathaway. I really should— should have bought it for a new entity.

Because Berkshire Hathaway was carrying this anchor, all these textile assets. So initially, it was all textile assets that weren’t any good. and then, gradually, we built more things on to it. but always, we were carrying this anchor. and for 20 years, I fought the textile business before I gave up. as instead of putting that money into the textile business originally, we just started out with the insurance company, Berkshire would be worth twice as much as it is now. So—

BECKY: Twice as much?

BUFFETT: Yeah. this is $200 billion. you can— you can figure that— comes about. Because the genius here thought he could run a textile business. (LAUGHTER)

BECKY: Why $200 billion?

Continue reading this article »

Warren Buffett: Buying Berkshire Hathaway Was $200 Billion Blunder-Video

I just finished listening to an audio book – The Snowball: Warren Buffett and the Business of Life. it is a biography of Warren Buffet who is one of my heroes. The audio book is 37 hour long and is very addictive. I could not stop listening to the audio book until it was finished.

Buffett is an extraordinary human being. one learns a lot from his biography. however, since I usually don’t listen to audio books, I don’t remember most of what I heard:-) after being in awe for 37 hours. following are a few random things I remember:

1. Buffett never acquired a company with a hostile takeover.

2. one should always have “margin of safety” when making investments. What that means is that one should not make investments where there is a risk of losing money if things don’t go according to the plan.

3. it is not a good idea to be on company boards where one doesn’t have any influence on the CEO.

4. Praise the individual and criticize the category. Buffett followed Dale Carnegie principles for human relations.

5. Charlie Munger played a critical role in changing how Buffett thought about investments.

6. Time is the friend of the wonderful business, the enemy of the mediocre.

7. Allies are essential.

8. Commitments are so sacred that by nature they should be rare.

9. Grandstanding rarely gets anything done.

10. one should think independently.

11. Work for people you admire and do business with people you like.

12. Protect your reputation at any cost.

13. The best way to solve a problem is to invert. for example, if you want to buy something think about why the other party is selling.

14. Society plays a big role in one’s success. If bill Gates were born in Bangladesh, he would not have been successful. Buffett calls being born in the right society which gives you opportunities to succeed as winning the ovary lottery.

15. 2008 was not the first time when the government help bail out private banks. The fed intervened to bail out LTCM in 1998.

16. be fearful when others are greedy, be greedy when others are fearful.

17. History does not tell you the future.

18. Doing a job just because it looks good on your resume is like saving sex for old age. Do a job that you like.

19. when you are buying a stock, you are buying a piece of the business.

20. The most important factor that made Buffett successful is Focus. And, bill Gates has the same opinion about the importance of Focus.

21. Stay within your circle of competence when making decisions.

22. Invest in business which have Sustainable Competitive Advantage or a “moat” around them.

This is in no way the complete list. Just a teaser to encourage you to read the book:-)

CDOQ-Chander’s Diary of Observations and Questions: Warren Buffett and the Business of Life

NewMarket Technology, Inc. (PINKSHEETS: NWMT) (OTCQB: NWMT) today announced that the Wall Street Reporter has interviewed NewMarket’s CEO Bruce Noller. the interview includes a review of the Company’s record first quarter 2010 results, including an approximate 33% year-over-year increase for the quarter, recent VAR500 ranking and the Company’s process for entering and growing business in emerging markets globally. the interview also covers NewMarket’s recent participation in the Microsoft World Partner Conference and ‘Speculative Buy’ rating with a price target of $0.27 per share.

NewMarket recently reported its highest revenue level ever for a first fiscal quarter with $25 million in profitable revenue and reported over $98 million in profitable revenue for 2009. Historically, the first quarter is NewMarket’s slowest seasonal period. Sales typically increase each subsequent quarter throughout the fiscal year.

NewMarket provides systems integration services primarily within emerging markets, to include technology reseller, customization, integration, outsourcing and support services, in China, Southeast Asia, Latin America and North America. Additionally, NewMarket is currently expanding its business services into the growing markets of East Africa.

The interview is available at www.wallstreetreporter.com, or directly via this link: http://www.wallstreetreporter.com/2010/07/newmarket-technologies-otc-nwmt-ceo-interview/

CEO Webcast TomorrowCEO Bruce Noller is scheduled to conduct a Webcast presentation tomorrow, July 27th, to review the Company’s year-to-date progress toward achieving its $150 million revenue forecast. the presentation is scheduled to be posted to the corporate website www.newmarkettechnology.com upon release.

PER Independent Analyst Research Report Update

Prime Equity Research (PER) recently issued an update to its one-year research coverage on the Company, giving NewMarket a ‘Speculative Buy’ Rating with a price target at $0.27 per share. the report reviews the Company’s 2009 and first quarter 2010 results and provides an update on the Company’s Greenfield Program, Project 510 as well as its expansion plans into the emerging markets of India and Southeast Asia, in particular Vietnam.

The independent analyst with Prime Equity Research is a CFA® (Chartered Financial Analyst®) charterholder. the analyst has previously conducted research for a number of Western European and North American financial institutions, including Janney Montgomery Scott. NewMarket engaged the analyst and paid for the services prior to any recommendation rating or price target to ensure objective research.

To review a copy of the initial report or the update, please visit the NewMarket corporate website under Investor Relations at www.newmarkettechnology.com or the Prime Equity Research website at www.primeequityresearch.com.

Sign up to Receive Regular NewMarket UpdatesNewMarket sends regular Company updates to its opt-in, permission-based email database. Interested investors can easily, safely and quickly register to receive these communications directly on the corporate website homepage at www.newmarkettechnology.com. Recipients can manage their own email contact profile and safely unsubscribe at any time.

About NewMarket Technology, Inc. (www.newmarkettechnology.com)NewMarket provides systems integration, technology infrastructure services and emerging technology worldwide. NewMarket has a focus on providing technology and support services to rapidly growing economies where technology purchasing is on the rise. In addition to its base of operations in North America, NewMarket has operations today in the growing economies of China, Southeast Asia, Brazil and Northern Latin America. Overall, NewMarket reported over $95 million in revenue for 2008 and reported over $98 million in profitable revenue for 2009.

Across the globe, NewMarket is a Microsoft and Oracle partner, distributes various computer hardware and peripherals from brand partners such as Dell, HP, IBM, Cisco, Sony, Epson, Canon and Sanyo and is also an authorized reseller of operating systems and various software from companies such as Red Hat, Sybase, IBM, BEA, Veritas and others. Additionally, the Company works with emerging technologies such as mobile computing, various security and wireless broadband technologies. NewMarket’s rapid growth since 2002 placed the Company on the Deloitte Technology fast 500 for 5 consecutive years. NewMarket was recognized as the third fastest growing technology company in the United States in 2006 and the number one fastest growing technology company in North Texas for two years in a row.

“SAFE HARBOR STATEMENT” UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995This press release contains forward-looking statements that involve risks and uncertainties. the statements in this release are forward-looking statements that are made pursuant to safe harbor provision of the Private Securities Litigation Reform Act of 1995. Actual results, events and performance could vary materially from those contemplated by these forward-looking statements. These statements involve known and unknown risks and uncertainties, which may cause NewMarket’s actual results in future periods to differ materially from results expressed or implied by forward-looking statements. These risks and uncertainties include, among other things, product demand and market competition. you should independently investigate and fully understand all risks before making investment decisions.

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Contact:NewMarket Technology, Inc.Investor Relationsir@newmarkettechnology.com214-722-3065

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Wall Street Reporter Interview With NewMarket Technology CEO Featuring Record Q1 Results and Emerging Market Strategy Available Online