When Warren Buffett was managing his early investment partnerships, he put the investments in the partnerships into three different buckets.
There were the so-called "generals," traditional value investments where the partnership had no controlling interest or much influence over the outcome. According to his early letters to partners, these accounted for the most significant percentage of the overall portfolio.
The second largest investment bucket was called "work-outs," securities with a "timetable we can predict." These companies had upcoming catalysts, such as a merger, liquidation or reorganization, making it easy to determine their worth and the overall return to shareholders. The returns from these securities were relatively predictable, as the upcoming situation would always crystallize value.
Q1 2023 hedge fund letters,...
