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Warren Buffett and Charlie Munger arranged for Blue Chip Stamps to buy See’s Candy in 1972. But it was a close run thing. Buffett, the follower of Benjamin Graham, was very concerned about the lack of balance sheet strength relative to the asking price, and refused to increase the price offered to anywhere near the asking price.
Mrs See
Mrs See is a character used by See’s in their marketing – an old photo on the boxes – but there really was a Mrs See. Mary was the widowed mother of Charles A. See.
Mother, son and daughter in law, Florence, together began making candy for sale from their Pasadena bungalow in 1921.
They quickly earned a reputation for their high quality old-style candy. Over the next few years they opened stores throughout California and became a much loved institution; people grew up eating See’s Candies as a treat.
In 1949 Laurence, Charles’ son, took over an operation with 78 stores. Laurence’s brother, Charles B. “Harry” See also worked for the company.
Chuck Higgins
Chuck Higgins was to become Buffett’s key man at See’s, producing over $1bn in cash for Warren to invest in other companies, so I’ll briefly describe his story.
Born in 1925, he was a paratrooper in the Second World War and later studied English. After a dead-end salesman job he was interviewed by Laurence See and hired in 1951.
Initially he worked for the general manager and was asked to do a great variety of tasks. His talent led to rapid promotion.
In 1969 Laurence See died at 57, and brother Harry was not willing to carry on running the firm – it’s said he wanted to enjoy “wine and girls” instead. Chuck Higgins, now vice president of the 150-shop enterprise, was asked to find a buyer.
Blue Chip Stamps’ interest
An investment advisor to Blue Chip Stamps, Robert Flaherty, discovered that See’s was up for sale in 1971. He and William Ramsey, a BCS executive telephoned Warren expressing their keenness to buy it.
Buffett’s first reaction was that he did not want to be in the candy business, thinking the companies were expensive. Then the phone went dead.
By the time Flaherty and Ramsey got reconnected Warren had looked at See’s accounts, and he had softened his line: he would be willing to buy it – at a price.
Towards the end of November 1971, Warren Buffett, Charlie Munger and Rick Guerin went to a Los Angeles hotel room to meet Harry and Chuck, the latter two having no idea who these investors were, other than they ran some small investment organisations………..To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1
