6 degrees of Warren Buffett
15 things in your life that make Buffett money
OMAHA, Neb. – When you brush your teeth, drive your car or open the fridge you are probably using a product Warren Buffett has invested in.
Buffett's Berkshire Hathaway is legendary for its diversity. The most well-known investor of our generation is at the helm of a holding company owning dozens of subsidiaries that sell products which range from "lollipops to jet liners," as Buffett stated in his most recent annual letter to shareholders.
Insurance is Berkshire's core operation and fueled its decades-long expansion. But the company's diverse business ventures include manufacturing, food, clothing, consumer products, credit cards, utilities, railroad and newspapers.
So go ahead, take a walk around your home and count how many items are affiliated with Buffett's Berkshire Hathaway. The sum may surprise you.
Ketchup anyone? It is an American kitchen staple and now Berkshire Hathaway is a major owner in H.J. Heinz. But the company does so much more than ketchup.
Other products include Bagel Bites, T.G.I. Friday's frozen entrees, Classico pasta sauce, Weight Watchers Smart Ones frozen entrees, Ore-Ida and Golden Circle. Buffett told shareholders they took control of Heinz in June 2013.
"With Heinz, Berkshire now owns 8 1?2 companies that, were they standalone businesses, would be in the Fortune 500," he wrote. "Only 491 1?2 to go."
At this year's annual shareholder meeting, Buffett and Charles Munger will have competing ketchup bottles for sale. Munger is the vice chairman of Berkshire's board of directors and has been Buffett's partner in investment decisions and capital allocation decisions for decades. Known for being folksy and funny in his annual letter to shareholders, Buffett said this of this year's ketchup bottle showdown: "Naturally, the one with Charlie's picture will be heavily discounted. But, if you help, my bottle will outsell his. This is important, so don't let me down."
NY Post's Page Six recently reported that Warren Buffett, the boy from Nebraska turned billionaire, caught Four Seasons staff off-guard when he asked for a Cherry Coke.
"We don't carry that kind of stuff, so I sent out people to CVS to buy it," Four Seasons co-owner Julian Niccolini is quoted as saying.
Buffett's love of Cherry Coke is legend. In fact, in 1986 he declared it would be the "official drink of the Berkshire Hathaway annual meeting." Two years later, in 1988 he began to buy shares of Coca-Cola and now he owns 9.1 percent of the company.
Coca-Cola brands include Dasani water, Fanta, Glacéau Vitaminwater, Minute Maid, Odwalla, Powerade and Sprite, so chances are you are drinking a beverage making Buffett money every day.
3. Ice Cream & Candy
NY Post's Page Six also reported Buffett requested dessert from Dairy Queen while at the Four Seasons.
"That wasn't going to happen," said a source.
The only Dairy Queen in Manhattan is under construction on West 14th Street, between Fifth and Sixth avenues, and won't open until May. Buffett settled for chocolate chip cookies.
Dairy Queen's yummy chocolate-dipped ice cream cones and Blizzard treats are also a Berkshire Hathaway holding. Buffett agreed to buy International Dairy Queen in 1997 for $585 million in cash and stock.
Berkshire also owns the chocolate company See's Candies, which was founded in 1921 in sunny Southern California.
Yep, you read that right. From boxers to bras, Berkshire Hathaway is a partner in your intimate apparel.
Berkshire Hathaway acquired Fruit of the Loom in 2002 for more than $800 million in cash. Subsidiaries of Fruit of the Loom are women's lines of lingerie to include Vanity Fair, Lily of France, Bestform and Curvation.
An Associated Press photographer captured this shot of Buffett playing the ukulele with Fruit of the Loom's signature characters at the annual shareholders meeting in Omaha in 2005.
At this year's annual meeting in Omaha, shareholders can buy a "commemorative Berky Boxer" with Buffett and Munger's mug on them for six bucks. They are advertised as "unisex shorts" that are "perfect as loungewear, swimsuit cover-up or underwear."
Not sure you'll be seeing those on South Beach.
Berkshire Hathaway's core operation continues to be insurance.
The most recognizable insurance operation in its portfolio is Geico. After having partial interest in the insurer for years, Berkshire Hathaway acquired it in full in 1995.
Here's what Buffett had to say about the car insurer in his 2013 annual report: "When I was first introduced to Geico in January 1951, I was blown away by the huge cost advantage the company enjoyed compared to the expenses borne by the giants of the industry. That operational efficiency continues today and is an all-important asset. No one likes to buy auto insurance. But almost everyone likes to drive. The insurance needed is a major expenditure for most families. Savings matter to them -- and only a low-cost operation can deliver these.
"Geico's cost advantage is the factor that has enabled the company to gobble up market share year after year. Its low costs create a moat -- an enduring one -- that competitors are unable to cross. Meanwhile, our little gecko continues to tell Americans how Geico can save them important money."
6. Consumer Products
Buffett has reduced his stake in Procter & Gamble over the past few years. The percentage of company owned by Berkshire now stands at 1.9 percent.
That said, the range of P&G products are significant, to include Gillette, Tide, Duracell, Crest and Pantene.
Berkshire also owns a 1.8 percent in the world's largest retailer, Walmart.
7. Your Home
"Hey honey, do you like 'van alen green' or 'palladian blue' for the kitchen?"
Next time you decide to spiffy up a room with Benjamin Moore Paint, you will now think of Buffett. Berkshire Hathaway acquired Benjamin Moore in 2000.
Or maybe you are living in a house built by Berkshire Hathaway's Clayton Homes.
According to Buffett, Clayton Homes "owns and services 326,569 mortgages, totaling $13.6 billion."
Buffett also told shareholders that in 2013 "the sale of new homes began to pick up and earnings from both manufacturing and retailing are again becoming significant. Clayton remains America's No. 1 homebuilder: Its 2013 output of 29,547 homes accounted for about 4.7 percent of all single-family residences built in the country."
Berkshire Hathaway also owns CORT furniture. The company rents and sells home and office furniture. Buffett is also the proud owner of Nebraska Furniture Mart (NFM), which Buffett tells shareholders will be expanding into the Dallas metropolitan area.
Buffett writes fondly about making that purchase in his 2013 annual letter: "I think back to Aug. 30, 1983 -- my birthday -- when I went to see Mrs. B (Rose Blumkin), carrying a 1 1?4-page purchase proposal for NFM that I had drafted. ... Mrs. B accepted my offer without changing a word, and we completed the deal without the involvement of investment bankers or lawyers (an experience that can only be described as heavenly). Though the company's financial statements were unaudited, I had no worries. Mrs. B simply told me what was what, and her word was good enough for me.
"Mrs. B was 89 at the time and worked until 103 -- definitely my kind of woman."
8. Real Estate
South Florida's legendary EWM (Esslinger-Wooten-Maxwell) Realty is a Berkshire Hathaway affiliate.
In 2012, Buffett's company bought Prudential Real Estate, which became part of the Berkshire Hathaway HomeServices brand.
9. Brooks & Boots
From running shoes to cowboy boots, Berkshire Hathaway also plays a role in what you put on your feet. Brooks is Berkshire's running-shoe company. Forbes' Kurt Badenhausen recently reported that sales at Seattle-based Brooks "have more than doubled from $180 million in 2009 to $409 million last year."
Berkshire Hathaway also owns Justin Brands. They make western and work boots. One brand, Tony Lama, caught my eye because of my time spent as a reporter in El Paso, Texas. Here's a bit of history about Tony Lama from the company's website: "After the turn of the century, Tony Lama joined the U.S.
Cavalry as a cobbler for the soldiers stationed at Fort Bliss, Texas. Once he completed his tour of service, he decided to stay in the nearby border town of El Paso. Realizing the importance of a good boot fit from his stint in the Cavalry, Tony Lama set out to make the best fitting, most comfortable boot possible."
10. Sports Apparel & Basketballs
Chances are when you hit the court to play some hoops you are shooting with a Berkshire-owned ball of leather. The NBA's official game balls are made by Spalding, a Berkshire Hathaway company.
Like Brooks, Berkshire Hathaway picked up Spalding when it acquired the Russell Corporation, "a leading branded athletic and sporting goods company," according to Russell's 2006 news release about the agreement.
Other Russell brands include Russell Athletic and Jerzees.
11. Credit Cards & Banking
According to Buffett's most recent letter to shareholders, Berkshire Hathaway owns just over 14 percent of the American Express Company and 9.2 percent of Wells Fargo & Company. Other financial interests include The Goldman Sachs Group, Inc. (2.8 percentage of company owned), Moody's Corporation (11.5 percentage of company owned) and U.S. Bancorp (5.3 percentage of company owned).
12. Television & Newspapers
Just this year, Berkshire Hathaway reached an agreement in principle to purchase WPLG Local 10 from Graham Holdings in a stock-swap deal.
The move came after Berkshire recently picked up "28 daily newspapers at a cost of $344 million," Buffett told shareholders. In 2012, he also told shareholders, "Charlie and I believe that papers delivering comprehensive and reliable information to tightly-bound communities and having a sensible Internet strategy will remain viable for a long time."
Berkshire Hathaway also owns 4.2 percent of DirecTV. Berkshire also owns Business Wire, an online distributor of regulatory filings and corporate media releases.
13. Put a Ring on It
Berkshire Hathaway's subsidiaries include fine jewelry to include Helzberg Diamonds, Ben Bridge Jeweler and Omaha-based Borsheims.
If you are lucky enough to attend Buffett's annual meeting in Omaha, you get the chance to experience deep discounts on select Borsheim items.
In 2014, Buffett plans to play clerk at Borsheims during a shareholder-exclusive event, telling them, "Ask for my 'Crazy Warren' quote on the item of your choice. As I get older, my pricing gets even more ridiculous. Come take advantage of me."
Borsheims is offering unique bling for the 2014 shareholders meeting. They are selling diamonds with Warren Buffett's signature laser-inscribed inside.
According to the company's news release, the loose diamonds "are laser-inscribed with Warren Buffett's signature, the Borsheims logo and a unique identifying number. More than two dozen of the diamonds are loose stones and ready to be mounted as earrings, pendants or rings with sizes ranging from a ¾ carat all the way up to a 5 carat diamond. They are available in both round and square cuts and range from $5,000 to more than $200,000."
14. Railroads & Jet Liners
Burlington Northern Santa Fe (BNSF) was Berkshire Hathaway's largest purchase in company history and it made quite a splash given that it happened in the midst of the "Great Recession." In a 2009 news release about the deal, Warren Buffett is quoted as saying, "Our country's future prosperity depends on its having an efficient and well-maintained rail system. … Most important of all, however, it's an all-in wager on the economic future of the United States. ... I love these bets."
According to Buffett's most recent letter to shareholders, "BNSF carries about 15 percent (measured by ton-miles) of all inter-city freight, whether it is transported by truck, rail, water, air or pipeline. Indeed, we move more ton-miles of goods than anyone else, a fact establishing BNSF as the most important artery in our economy's circulatory system. Its hold on the No. 1 position strengthened in 2013."
Buffett considers BNSF part of his "Powerhouse 5," which he describes as a "collection of large non-insurance businesses that, in aggregate, had a record $10.8 billion in pre-tax earnings in 2013, up $758 million from 2012."
The other four include MidAmerican (utility), Iscar (tool-making company), Lubrizon (leader in specialty chemicals) and Marmon (manufacturing).
NetJets is a wholly owned subsidiary of Buffett's Berkshire Hathaway.
Correspondent Alex Skjong in Forbes Travel Guide describes flying with NetJets "like having your own personal jet waiting at your beck and call to whisk you off to almost any destination around the globe. With NetJets, you own an interest in a private plane and have exchange privileges within a fleet of more than 800 jets worldwide. The NetJets fleet includes light, mid-size and large cabin sizes to accommodate anywhere from seven to 14 passengers, so you can fly with the family, the business team or by yourself."
In his latest annual report, Buffett suggests that shareholders visit Signature Flight Support on the east side of the Omaha airport while they are in town for the annual meeting. "There, we will have a fleet of NetJets aircraft sure to set your pulse racing," Buffett writes. "Come by bus; leave by private jet. Live a little."
Berkshire Hathaway owns 0.9 percent of Exxon Mobile Corp and 3.4 percent in Phillips 66.
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