Newman each received salary and incentive
compensation of $80,214. The net
assets in the fund had grown to $6,162,000.
In 1953, net assets peaked at $7,267,000.
The fund was liquidated in 1957 after Graham’s
retirement to California.
In addition to their joint holdings in the
Graham-Newman Corporation, both Graham
and Dodd were partners in Newman
and Graham, a private hedge fund, which
carried on the arbitrage strategies of the
Benjamin Graham Joint Account.
They were also partners in a controlling
investment in Government Employees
Insurance Company (GEICO). Graham
was chairman of the board and Dodd was
an investor and member of the board of
directors of GEICO and related companies.
He was vice chairman of the profit-sharing
plan of all the companies from 1960–63.
Graham-Newman’s investment of $712,000
in GEICO in 1948 eventually resulted in a
position worth $400 million by 1972.
Relationship with Warren Buffett
(1950–1988)
By 1950, Dodd had ascended the academic
ladder to become a full professor and Associate
Dean for Admissions. According to
Columbia Business School: A Century of
Ideas, in August of that year he was contacted
by a young graduate of the University
of Nebraska named Warren Buffett
who was investigating graduate schools to
attend. The normal application deadline for
the fall term had passed, but Dodd agreed
to admit him, perhaps because of Buffett’s
familiarity with Security Analysis and The
Intelligent Investor, which had been published
the year before. According to Columbia
Business School: A Century of Ideas:
Although only at the school for one
year, Buffett took a well-attended
investment course, Finance 111–112
Investment Management and Security
Analysis, from Dodd in the fall of 1950
and a much smaller seminar class with
Graham in the spring of 1951. Dodd
taught his class using the 1940 edition
of Security Analysis. Graham taught
mostly by presenting then-current
investment cases.
In these classes, a young Buffett “learned
the details of reading a financial statement
from Dodd, and Graham taught him how
to use a company’s published financial
statements to estimate the fair value for
David Dodd’s guest cabin on Chebeague Island, Maine, which he used as a summer retreat for writing.
its securities.” Indeed, Graham and Dodd
“gave Buffett the tools to begin mastering
the art of investing.” Graham famously
awarded him the only A+ grade in his 21
years of teaching and hired him as an analyst
at Graham-Newman. According to
his grandson, David Anderson, Dodd was
disappointed that Buffett decided to leave
after one year. He was looking forward to
mentoring him again for another year.
When Buffett founded the Buffett Partnership
in 1956, Dodd invested as an
expression of support, without any particular
expectation of a huge return. Dodd
followed up by investing in Berkshire
Hathaway after the Buffett Partnership
was liquidated at the top of the market in
1969. He bought the Berkshire Hathaway
shares in the name of his daughter, Barbara
Dodd Anderson.
Later Years at Columbia (1951–61)
One of Dodd’s students in the spring
semester of 1957 was Judy Stein, one of
only six women at Columbia Business
School at that time. She was an economics
major from Mount Holyoke College,
and only a few years younger than
Dodd’s daughter Barbara. Stein remembers
Dodd’s style of teaching as being a
combination of lecture and discussion. He
was low-key and conversational, but also
required that students speak up in class.
He used the third edition (1951) of Security
Analysis as his textbook.
Dodd was very supportive of Stein in
her career and wrote letters of recommendation
for her to both George Weiss, a
senior partner of Bache & Co., and Henry
Loeb, a senior partner of Loeb Rhoades &
Co., a research-oriented stock brokerage
firm. Loeb hired her as an analyst, making
her one of only four women security
analysts on Wall Street during the 1950s.
Retirement Years (1961–1988)
Dodd continued to teach security analysis
at Columbia until 1961, when he retired.
He passed the mantle to Roger F. Murray,
who educated the next generation
Courtesy of David Anderson
www.MoAF.org | Summer 2020 | FINANCIAL HISTORY 13