Barnett Helzberg was at New York’s Plaza Hotel, when he heard a woman holler, “ Warren Buffett !” He spun around and yes, it really was. Barnett Helzberg did not waste the opportunity — he introduced himself and told Buffett he owned a company that satisfied the “acquisition criteria” laid out by him in the Berkshire Hathaway annual report (Warren Buffett has been listing his acquisition criteria in the annual report for over three decades now). The billionaire investor told him to send across the information. Having sent the details of his company Helzberg Diamonds, he soon found himself in Warren Buffett’s office at Omaha. Warren Buffett looked at him and said, “Well, this will be the fastest deal in history.” When a perplexed Helzberg asked about due diligence, Buffett replied, “I can smell these things. This one smells good.” Still, in doubt, Barnett Helzberg asked, “You would want a non-compete clause, right?” “No. You will never do anything to hurt this company.” Barnett Helzberg did an all-stock deal without any negotiation or haggling over price. Today, he still gets a monthly profit and loss statement of the company he sold nearly two decades years ago.
Helzberg Diamonds is just one of many businesses that Warren Buffett has bought in double quick time. And Barnett Helzberg is only one of many promoters who would like to sell their businesses to Berkshire Hathaway. “They know he is not going to change it, he is not going to sell it, and he is not going to take it public. That is why he is the best person in the world to sell out to. That is also why Warren gets the opportunity to buy some very good family businesses,” says Barnett Helzberg.
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The economy remains in distress, although there are signs of recovery underway. John Buckingham of Kovitz, editor of The Prudent Speculator newsletter, has found that value stocks typically outperform coming out of economic downturns. Thus, he argues that this is an excellent time to be a value investor. Q4 2020 hedge fund letters, conferences and Read More
The Helzberg story is a perfect demonstration of Warren Buffett’s razor-sharp edge in assessing a business and his ability to gauge people and intent. It’s quite a combustible combination. And something every business leader needs to develop.