Buffet and his United States Gypsum (USG) purchases

I want to reconstruct the USG purchases done by Warren Buffett. It was one of my best profits for the period 2008/2010. After selling I rebought just a bit on the following dip during the European sovereign panic last year and some last week under 14 and plan maybe to add substantially more. One of the things I always wanted to do is reconstruct Warren Buffett’s buying history. Here bellow you can find every single share/price/date with the links to the official SEC documents:

2000 Nov 28 – LA Times: Chicago-based USG’s shares jumped $4.44 to $19.38 after Berkshire disclosed its investment of 6.5 million shares in a Securities and Exchange Commission filing…. USG’s falling shares have also attracted an investment from the family of German wallboard magnate Nikolaus Knauf. A holding company affiliated with the Knauf family last month reported acquiring a 9.9% stake in USG…. Berkshire’s 14.98% stake is just under a threshold that would trigger USG’s takeover defenses if an outside investor buys 15%…

Accumulated total: 6,500,000

2006 August 2 – SEC 13 D/A:

The closing under the Equity Commitment Agreement, as amended, occurred on August 2, 2006, pursuant to which NICO acquired 6,969,274 additional shares of Common Stock of USG (the “Additional Shares” and, together with the Original Shares, the “Shares”) for $40 per share, the exercise price in USG’s rights offering. The Additional Shares consisted of 6,500,000 Shares underlying rights distributed on the Original Shares, and 469,274 Shares underlying rights distributed to other stockholders that were not exercised in USG’s rights offering.

Accumulated total: 13,469,274

2006 August 8 – SEC 13 D/A:

Date Purchased Shares Acquired Price Per Share
8/02/2006 692,500 $45.46
8/03/2006 26,900 $45.71
8/07/2006 82,900 $45.80
8/08/2006 1,200 $45.81
8/09/2006 587,100 $45.98

Accumulated total: 14,859,874

2006 August 24 – SEC 13 D/A:

Date Purchased Shares Acquired Price Per Share
08/10/2006 118,500 $46.01
08/11/2006 23,500 $46.03
08/21/2006 567,218 $45.92
08/22/2006 390,200 $45.97

Accumulated total: 15,959,292

2006 October 6 – SEC 13 D/A:
Date Purchased Shares Acquired Price Per Share
08/23/2006 734,700 $45.90
08/24/2006 7,000 $46.03
10/04/2006 371,200 $46.10

Accumulated total: 17,072,192

Average price: (6500000×15 + 6969274×40 + 692500×45.46 + 26900×45.71 + 82900×45.8 + 1200×45.81 + 587100×45.98 + 118500×46.01 + 23500×46.03+ 567218×45.92 + 390200×45.97 + 734700×45.90 + 7000×46.03 + 371200×46.01)/17,072,192 = 31.72 US$/share

Supposing that his 250 million convertible debt at 11.4 per share are included that adds 21.93 million shares and his total shares would be on a fully post conversion diluted basis 17.07+21.93 millions at an average price of 21.93×11.4+31.72×17.07/(17.07+21.93) = 791.46÷(17.07+21.93) = 20.29 US$/share

Note that there are currently 103 million shares add to that the ones corresponding to the 350 million convertible debt at 11.4 from both Buffett and Pram Watsa and you get 133.7 millions on a fully diluted basis. Buffett owning 39 millions of them bought at 791 million dollars, so he actually bought 29.16% of the company on a diluted basis @20.29 dollars per share. One thing we can say is that he has been very persistent !

Also note that the total number of USG shares in the year 2000 was 43.5 million and the USG had no debt almost: (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?lstStatement=10YearSummary&symbol=US%3aUSG&stmtView=Qtr)

Number of USG shares after convertible debt conversion: at least 130 millions, probably much more due to the anti-dilution clause which will offer shares to the current holders at good terms (or the same) to avoid being diluted when Watsa and Buffett get their debt converted shares.

There has been quite a big share dilution for my taste, I do not expect the post-recovery profits to grow as much as the number of shares so the same prices that were reached in the past will be to say the least “difficult to attain”. The price will probably be higher than today, but I do not expect an enormous price climb due to the bigger share and debt base tailwinds.