Warren Buffett’s Top Plays: #6 Geico

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      Lesson summary:

      In 1976, Warren Buffett bought shares in GEICO, which was the fourth largest auto insurer in the US with a market share of 4%. Over the period 1976-1980, he accumulated 33% of the outstanding shares for $47m. By 1996, he had bought the remaining 50% of the company for $2.3b. Today, GEICO is the second largest auto insurance company in the US with a market share of 14%. Since the purchase, GEICO has contributed $15.5b pre-tax in underwriting profits to Berkshire Hathaway. Buffett saw value in GEICO because it was cheap, had a unique advantage in direct marketing, and had recently installed new management.

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