Reading the Letter to Partners of Buffett Partnership 30 Jan 1961

In 1960, the Industrial Average declined from 679 to 616 or 9.3% (with dividend included, 6.3% loss), where Buffett Partnership had 22.8% gain.

Buffett emphasized the partnerships' objective in his writing:

My continual objective in managing partnership funds is to achieve a long-term performance record superior to that of Industrial Average. Unless we do achieve this superior performance there is no reason for existence of the partnerships.

I guess not many investment manager will voice out loud the partnership's objective as per Buffett, especially the later statement above.

Buffett disclosed the largest holding of the partnership (represents 35% of assets), Sanborn Map Co. engaged in the publication and continuous revision of extremely detailed maps of all cities of the United States. The maps mainly sold to thirty insurance companies for fire insurance underwriting purpose, also sold to public utilities, mortgage companies and tax authorities. Sanborn's operating business heading south with the change of underwriting method known as "carding" in the early 1950, annual after tax profits fell from over $500,000 in the late 1930 to under $100,000 in 1958 and 1959. However, Sanborn had accumulated $2.5 million investment portfolio (50% bonds, 50% stocks) since early 1930 which blossomed in the last decades while the operating map business wilted.

I will attempt to analyze the reasoning behind the purchases of Sanborn here:

1. Even Sanborn operating business turn south, but the fair value of accumulated investment portfolio not fully realized.
2. There is a way to re-establish the Sanborn map operating business to multiply it's profits and most importantly management and top officers have the similar idea and supporting this plan.

I'd love to hear your comments about my analysis above.