Wednesday, September 25, 2013

Discovered: A New Berkshire Billionaire

 

Wednesday, September 25, 2013

 

 

Discovered: A New Berkshire Billionaire
by Chris Preston

 

In 1980, Stewart Horejsi was a typical small business owner with a struggling welding supply company. Thirty-three years later, Horejsi is a self-made billionaire and a poster child for buy-and-hold investing.

 

Horejsi's journey from near-"rags" to riches began with a modest investment in a company called Berkshire Hathaway. Horejsi, a Kansas native, bought 40 shares of the local company because he was taken with the story of how local businessman Warren Buffett turned the former textile company into a multi-billion dollar investment giant.

 

Horejsi initially bought the stock at $265 per share. Two weeks later he added 60 more shares at $295 apiece. A month later, Horejsi bought 200 shares for $330 each.

 

What was an initial investment of $10,600 has turned into $745 million. Over the years, Horejsi bought a total of 5,800 "A" shares of Berkshire Hathaway (NYSE: BRK-A). Today, the price of one Berkshire A share is trading for more than $173,000. From 1980 until now, his return on Berkshire alone was 40 times greater than the S&P 500's return over the same time period.

 

Stewart Horejsi should be a lesson to every long-term investor. He saw an attractive opportunity and invested for the long haul. Horejsi kept adding to his position over the years, holding onto to every one of the shares he'd accumulated until 1998. He then sold one-quarter of his position when Berkshire reached a then all-time high of $78,000.

 

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Patience and conviction helped make Horejsi a billionaire. They were also the virtues upon which Berkshire Hathaway itself was built. Warren Buffett became the world's premier investor by buying great businesses when they are attractively priced. And it is that quest for value that has turned Berkshire into a $285 billion company today.

 

Berkshire Hathaway not only made Buffett very rich - it made anyone who invested in the company early on rich too. Stewart Horejsi is one of several "Berkshire Billionaires" out there. In addition to several of the company's top executives, including Buffett's right-hand man Charles Munger, there are a pair of other billionaires listed on the Forbes 400 who earned their fortune by investing in Berkshire.

 

The Berkshire Billionaires are a lesson in patient, long-term investing. Few investors become billionaires by buying a lot of shares in one stock the way Horejsi did. But patient investors who "buy what they know" and hold onto great companies for the long-term can often achieve stellar returns.

 

Chances are you won't become the next Stewart Horejsi - a humble businessman who struck it rich by investing in the right stock at the right time. But by embracing his buy-and-hold philosophy in your own portfolio, you give yourself a better chance to identify a long-term winner that could produce some serious returns years down the road.

 

Good investing,

 

Chris Preston

Richmond, Vermont   

 

 

 

Further Reading:

 

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