Every year, towards the end of February, I have marked a date on my calendar to which I truly look forward. That is the day that Warren Buffet’s letter to the shareholders of Berkshire Hathaway is released for all to read. This year’s letter was just the latest of a long series of gems. If you would like to read about the highlights of this 23 page document, you can read my article on my blog, on our new website under the title : “What does 9.6 trillion dollars look like?”
For now, I would like to focus on a simple idea: Is selling to Warren Buffet a good idea? CertainlyWarren is one of the most celebrated and successful investment professionals of the modern era. You might also know that he intends to give away his entire fortune of some 40 billion dollars to the Bill andMelinda Gates Foundation to be distributed to worthy charitable causes.
But the question I am posing to you is: Do you think it is a good idea to sell some asset you own to such a sharp business person such as Warren Buffet? As it turns out, the answer to that question is really: “That depends”. There are actually two different answers. Let me explain.
Let’s return for a moment toWarren’s annual shareholder letter to recount a couple of his stories. Some years ago, in Omaha, Nebraska, a remarkable business woman entered into an agreement withWarren Buffet to sell to Berkshire Hathaway a company she had spent forty-six years building. At the time of the sale, she was 89 years of age. In 1983,Warren Buffet- Omaha resident and the second richest man in the United States bought an 80% interest in Nebraska FurnitureMart on a handshake from the Blumkin family for $55 million. He said that he would want to be involved in any business Rose Blumkin was a part of even if it was a popcorn stand. Buffet had often thought of buying the store, and on his birthday just walked in and asked how much they would sell it for and wrote them a check.
The company she sold to Warren Buffet was called Nebraska Furniture Store and this remarkable woman, with the help of her family, had built this company from a fledgling furniture store to one that sold affordable goods to customers hundreds of miles away. Indeed, Warren noted in this year’s letter that “Nebraska Furniture” was expanding to a new north Texas location, from which Berkshire estimates it will sell $600-$800 million dollars of merchandise per year.
