Joe Rosenfield: A Warren Buffett Mentor

"I'd never wanted to replace my real father -- but after my dad's death if I could have adopted Joe as my father, I would have." - Warren Buffett

That's a quote that Buffett once told famed financial journalist Jason Zweig for an article called "The Best Investor You've Never Heard Of".

In roughly 30 years, Joe turned a small school in Iowa into one of the richest colleges in America. Let's take a look at how he did it.

Joining Grinnell

Given Rosenfield's unwavering commitment to investing for the long-term, it's somewhat ironic that Joe didn't actually enter the investment field until he was nearing retirement age.

Prior to managing investments, Joe spent 2 decades practicing law, another decade as chairman of an Iowa-based retailer, and 20+ years serving on the board of Grinnell College.

It wasn't until the mid 1960's that Joe was named Chairman of Grinnell College's Investment Committee.

Managing Grinnell's Endowment

Unlike most college endowments which follow a hyper-conservative strategy by either greatly diversifying their portfolios or buying mostly government bonds, Joe took a different approach.

Joe reportedly told a colleague "Our job is to make this institution financially impregnable." And to do just that, Joe took big bets on businesses and people that he believed in.

Though there aren't records of all his investments, there are several high profile ones that have been made public over the years. Here's a few worth mentioning:

• Late 1960's: Grinnell bought 300 shares of Berkshire Hathaway after Rosenfield was introduced to Warren Buffett. The two subsequently became great friends and often shared investment ideas with each other.

• Also in the late 1960's, Grinnell invested $300,000 in a startup founded by a Grinnell dropout named Robert Noyce. At the time the company was called NM electronics but would later renamed Intel.

• In 1976, Warren told Joe about a TV station called WDTN based out of Dayton, Ohio that was looking to be acquired. After careful diligence, Joe bought the entire station for $12.9 million. He sold it 5 years later for $49 million.

• From 1978 to 1981, Grinnell made one of its most important investments. Joe allocated 1/3rd of the endowment's capital with the Sequoia Fund. Sequoia significantly outperformed the broad market over the succeeding 20 years.

Performance and Philosophy

While the exact returns are hard to come by today, during Rosenfield's time in charge, Grinnell's endowment grew from $11 million to more than $1 billion.

Today the endowment touts ~$2.5 billion, which is an astounding sum for a school with only about 1,800 students.

Unfortunately Joe passed away more than 20 years ago now, but there are still plenty of lessons investors can take away from his career.

Joe kept his investment approach simple. He was highly selective, he bet on people he believed in, and he rarely sold. In fact, Joe once said “If you like a stock, you’ve got to be prepared to hold it and do nothing.”

In the words of his long-time friend and fellow Grinnell Board member, Warren Buffett: "Joe is a triumph of rationality over convention."