If there ever comes a time that Warren Buffett shows an interest in your business, let him buy it with shares of Berkshire Hathaway stock and forget about cash. Some of the richest families in America acquired their multibillion-dollar fortunes this way.
All in all, at least six families worth $1 billion or more – with a combined net worth of $165.1 billion – have ties to the investing conglomerate Berkshire Hathaway.
Warren Buffett purchased Berkshire Hathaway back in 1964 and turned it into the main vehicle for his investing. Over the last 15 years, average annual Berkshire Hathaway returns for Class A shares was roughly 7%. You can compare this to the 4.3% for the S&P 500. In recent years, the company has been buttressed by iconic brand investments including Exxon Mobil and H.J. Heinz.
Two families on the newest Forbes list, the Ueltschis and Alfonds, sold their companies to Berkshire Hathaway. They then had the distinct pleasure of watching their net worth’s grow along with Berkshire Hathaway stock. The Booths, another family, cashed out on a real estate related deal that put $1 million worth of profit into stock from Berkshire Hathaway. For all three of these families, it definitely seems likely that they were much better off getting stock instead of cash. Because instead of putting the money into an investment fund or a family business, they had Warren Buffett “managing” their family fortunes for many decades.
Some other Buffett led investments that raised families onto the new Forbes list of the richest families in America include Norfork, Virginia’s Batten family. Last year, they sold two newspapers to the media arm at Berkshire Hathaway. The Grahams, based out of Washington DC, were also raised up onto the list. Graham Media Holdings, previously known as the Washington Post Company, previously owned 3000 Berkshire Hathaway shares prior to selling them back in a deal made just last week. (Berkshire Hathaway once owned roughly 23% of the company, but in exchange for that stake, Berkshire now outright owns a subsidiary that includes an ABC affiliate in Miami). The Walmart retail conglomerate owned by the Waltons also has Berkshire Hathaway as an investor. Buffett and company own just under 2% of outstanding Walmart shares.
Here’s a brief rundown of how the three most fortunate families to deal with Warren Buffett attained shares in Berkshire Hathaway at the correct time:
The Alfond Family
In 1993, Harold Alfond traded his Dexter Shoe Company for what had amounted to nearly $300 million worth of Berkshire Hathaway stock. Even though Alfond never went to college, he died as a billionaire in 2007. His family is currently worth about $4.2 billion, and this is largely in part due to the incredible rise in value of Berkshire Hathaway stock.
After the acquisition of the shoe company, the Alfond family became the second-largest shareholder of Berkshire Hathaway stock at the time and owned around 25,000 shares.
The total return on investment was 1275%.
The Booth Family
Warren Buffett and Franklin Otis Booth Jr. met in 1963. They took the $1 million profit from a small Los Angeles real estate deal and poured it into what we know as Berkshire Hathaway. When he died in 2008, the shares were worth more than $2 billion. His 30 descendents are worth a combined $2.9 billion at this time.
When Franklin passed on, six of his children divided up 15,000 shares. They also donated 1500 shares to the charity the Otis Booth Foundation.
The overall return on investment is 277,700%.
The Ueltschi Family
In 1996, Warren Buffett purchased FlightSafety International, an aviation training company. He purchased it for $1.5 billion worth of Berkshire Hathaway stock at the time. Former Pan Am pilot and founder Albert Ueltschi died in 2012. His family continued to hold onto the Berkshire Hathaway shares, and they are now worth an estimated $2.9 billion.
The family currently has an estimated 16,000 shares. The overall return on investment is 93%.