Warren Buffett's dream investment |
| Credit: The Hustle |
OVERVIEW
• Warren Buffett, CEO of Berkshire Hathaway is the most famous investor of the 20th century
• His major investments include in Apple, Bank of America, American Express, Coco-Cola, Chevron and many more
• But Buffett's favorite investment of all time isn't on in the Fortune 500, it's a small candy company that he bought 50 years ago
SEE's CANDIES
• See's Candies was founded by Mary See in the backwoods of Ontario, Canada in 1921
• The company put Mary's face on the cover of every $0.85 box, and adopted the slogan "Quality without compromise
• By 1970, See's successors were looking for an exit which led to the entry of Oracle of Omaha aka Warren Buffett
• Warren Buffet bought See's Candies for $25m more than 6x its earnings, and 3x its book value.
WHY DREAM INVESTMENT?
• Due to strong built-in customer loyalty, Buffett raised the effective price per pound by 10% per year, far above the rate of inflation.
• While stores and volume grew only 2% and 3% respectively during the first ten years of purchase
• In 1982, Buffett was offered $125m for See's - 5x the $25m he'd paid for it just 10 years earlier but he passed, opting to let the company grow slowly
• Since 1972, the company has given Berkshire Hathaway over $2B in income, that's a return of more than 8k%, or 160%+ per year.
• Even in late 1980s, he used See's profits to buy Coca-Cola shares, which are now collectively worth more than $25B
• Today, See's Candies sell for $22.50 per pound, about double the 1972 price after adjusting for inflation and still its customers have remained loyal.
• See's had survived the Great Depression and the storm of ecommerce, even during the pandemic, the bulk of the company's sales still happen in-store.
• Warren Buffett rightly said "Price is what you give, value is what you get".
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