Issue No. 7 - Mar 17, 2008
Can you spare this man a dollar? You, too, can make "a loan" of sorts to the world's richest individual...Warren Buffett. How? Read on to find out...
FORBES Magazine came out earlier this month with their annual list of the world's richest individuals. It may have caught some by surprise the newest occupant of the top spot is Warren Buffett, Chairman of Omaha, Nebraska-based BERKSHIRE HATHAWAY. With his estimated wealth of $62 billion, he has now surpassed his friend and long-time holder of the number one position, Bill Gates (bumped down to the Number 3 spot with a "paltry" $58 billion).
But, for all of his riches, he is always ready to take in some more money. Not that he is in any sense of the word greedy: he has already earmarked a large portion of his wealth (shares in BERKSHIRE HATHAWAY) to charity (The Bill & Melinda Gates Foundation) upon his death. If you have a spare $130,000 or so laying around, you, too, can purchase just one share of the company's Class A stock. Much more affordable is a share of Class B stock, currently around $4400. So, how can even the common man on the street get a piece of the action? Buy a gift card!
Gift cards are treated as an "unsecured loan" to a company. When one buys a gift card, the money received for that purchase is set aside as a liability on the company's books until the holder of the gift card presents it as a form of payment, at which time it can be recorded as sales revenue. In the event of a bankruptcy and total liquidation of a company, the holder of a gift card would stand in line, after shareholders and other secured creditors, to receive any payment (likely to be only a fraction --- if anything --- of the remaining value on the gift card). Not that anyone should be worried, however, about the financial health of BERKSHIRE HATHAWAY or any of their subsidiary companies.
Now, you can't just buy a BERKSHIRE HATHAWAY Gift Card at the kiosk in your nearest grocery store. But you can buy gift cards in several of the company's that make up BERKSHIRE HATHAWAY, a vast holding company that owns outright or majority shares in about 50 corporations (and major investments in others). Companies that help build the homes we live in (Acme Brick Company, Clayton Homes, Johns Manville), insure us (GEICO Auto Insurance), insure the insurance companies (General Re), clothe us (Fruit of the Loom, Garan Incorporated, H.H. Brown Shoe Group, Justin Brands), deliver the food we eat (McLane Company), and more! You can see and link to all of the companies by visiting www.berkshirehathaway.com, then selecting "Links to Berkshire Subsidiary Companies." (http://www.berkshirehathaway.com/subs/sublinks.html)
So, just what companies can you buy a gift card from? For those with a sweet tooth, visit your local DAIRY QUEEN store. While most of the stores are franchised, the franchisor is INTERNATIONAL DAIRY QUEEN, INC., one of the holding company's components. Even your kid can afford one of their gift products: a book of ten $1.00 gift certificates for $10.00, or a gift card starting at only $5.00...both available online at www.dairyqueen.com. Another affordable "loan" to the "Oracle of Omaha" is a Prepaid Gift Card from SEE'S CANDIES, the San Francisco-based confectioner. You can buy their gift cards, in values of $25 and $50, online at www.sees.com.
Then there are the "Crown Jewels" in the empire: Kansas City-based HELZBERG DIAMONDS (www.helzberg.com, however with all of their tremendous riches, they have not figured out a way to offer their gift cards for sale online), Seattle-based BEN BRIDGE JEWELER (over 70 stores in locations just about all west of the Mississippi, or online at www.benbridge.com, also unable to work out the online sale of their gift cards), and one store for Mr. Buffett to visit whenever he is at home in Omaha, BORSHEIMS (who has figured out this internet thing, and offers their gift cards for purchase online at www.borsheims.com).
You can also "pamper" yourself --- not at a spa (none so far in the company) --- but in the kitchen with THE PAMPERED CHEF (www.pamperedchef.com)...their gift certificates starting at $20.
Three subsidiaries that could likely use some help (assuming that home furnishing sales are negatively-affected by slowing home sales) are JORDAN'S FURNITURE (Boston area, and online at www.jordans.com), STAR FURNITURE (Houston, Austin, San Antonio and Bryan-College Station, Texas, and online at www.starfurniture.com) and possibly where Mr. Buffett picks up an end piece to go with his sofa...the Omaha-based NEBRASKA FURNITURE MART, with other locations in Des Moines and Kansas City (www.nfm.com).
Then, there is one "gift card" that is out of reach for most of us (but is likely affordable to those investors who bought shares of BERKSHIRE HATHAWAY back in the 80's --- when there was only one class of stock --- the same shares that now go for $130,000 could be had for a mere $7000 or so): a "Marquis Jet Card" offering 25 hours of occupied flight time through NetJets (www.netjets.com). You've heard the saying: "If you have to ask how much it costs, you probably can't afford it," so I've not inquired!
From Dilly Bars to diamonds...dark chocolate to dinettes... get your (very small) "piece" of BERKSHIRE HATHAWAY (for a fraction of the price the stockholders paid) by purchasing one of their subsidiary company's gift cards.
Now...here's some Gift Card activity from a company Warren Buffett has not yet purchased: DUNKIN' DONUTS. Through 03/31/08, they are accepting entries in their "CELEBRATE YOUR HEROES" promotion. Possibly this is one of their efforts to ramp up the battle for coffee supremacy with STARBUCKS (who introduced customized STARBUCKS Cards late last year). They are looking for artwork, to be used on their website (quite possibly to help promote their DUNKIN' DONUTS Custom Cards)...one grand prize winner selection for Mother's Day and one for Father's Day. The winners will likely have their artwork featured on the website and will each get to select one 501(c) charitable organization to receive a $500 donation. You can obtain a downloadable entry form and see all of the rules by visiting their website at www.dunkindonuts.com. It's great that they are doing this, but at first glance of the promotional artwork shown on their site, one could very well think "this is a good promotion for my kids to enter...they can draw stick figures better than that!" Read the Official Rules: "The contest is open to all legal residents of the United States and the District of Columbia who are 18 years of age or older..."
If they were really serious about competing with STARBUCKS, you would think they would open this contest up to kids under 18, many of whom are "addicted" to STARBUCKS' line of Frappuccino® beverages. Get'em hooked while they are young! (I can visualize nutritionists cringing all across America as they read this!)
Check out recent gift card postings on the RETAIL RADAR SCREEN for the following retailers: DON PABLO'S and SHARPER IMAGE. With the nation's economy not looking so healthy, there are likely to be more national and regional retailers experiencing difficulties. You don't want to be a gift card holder stuck with a worthless piece of plastic.