Bill Child entered negotiations to sell his business to Warren Buffett armed with a crucial piece of advice: Try to get some Berkshire Hathaway Inc. stock as part of the deal.
“That was one of the best decisions I’ve ever made,” said Child, who sold R.C. Willey Home Furnishings for Berkshire shares in 1995, when the stock was trading around $24,000. Those shares would now be worth roughly $2.5 billion – or about a 14-fold increase – if the family hadn’t sold some of its stake, according to calculations by Bloomberg.
Woven into Berkshire’s history are the stories of the business owners who helped make Berkshire the sprawling behemoth it is today and the shareholders who’ve stuck by Buffett, many of whom will flock to Omaha, Nebraska, this weekend for the firm’s annual meeting.
Buffett and business partner Charles Munger have taken Berkshire Hathaway from an ailing textile firm to a $531 billion company with businesses ranging from insurer Geico to fast-food chain Dairy Queen to railroad BNSF. The transformation hasn’t just made Buffett the fourth-richest person on the planet. It has also helped create at least seven other billionaire fortunes, ranging from Munger to faithful early investors to families behind the businesses he’s acquired, according to the Bloomberg Billionaires Index. Staggering Gain
The climb hasn’t always been smooth. Berkshire shares were punished in the wake of the 2008 financial crisis, and the stock has returned less than the S&P 500 Index over the past decade. But investors sticking around since 1964 have seen a staggering gain of 2,472,627 percent, or roughly 165 times more than the benchmark. A $10,000 investment 55 years ago would be worth more than $170 million today.
“The people who were wise enough to say ‘He’s been amazing, his track record is phenomenal, I’ll just do what he’s doing’—those are the ones who obviously succeeded the most over time,” said Darren Pollock, a portfolio manager at Cheviot Value Management, which oversees $380 million including Berkshire Class B shares.
Buffett has a penchant for buying family-owned businesses and keeping existing management in place after bringing them into the Berkshire fold. “When we get somebody who is a .400 hitter we don’t start telling them how to swing,” he has said.
Some family businesses Buffett acquired include the Van Tuyls’s auto dealership network for $4.1 billion, prefabricated home manufacturer Clayton Homes for $1.7 billion, Rose Blumkin’s Nebraska Furniture Mart for $55 million and Al Ueltschi’s FlightSafety International for about $1.5 billion.
Stock Deals
Kevin Clayton, who leads the business his father Jim Clayton built, said the arrangement with Buffett has helped the company when it sought to expand and boosted the family’s ability to donate to local causes, including the Knoxville, Tennessee zoo and a science center.