Tren Griffin @trengriffin I work for Microsoft. Previously I was a partner at Eagle River, a private equity firm established by Craig McCaw. I am on the board of directors of Kymeta. Dec. 24, 2019 2 min read

This would be a great business for BRK to buy, but the sellers aren't the first or second generation and they don't run the business. The founder or his children may not have wanted the business to end up in the control of a private equity firm.  https://www.google.com/amp/s/www.oregonlive.com/business/2019/12/oregon-tire-empire-les-schwab-considers-putting-itself-up-for-sale.html%3foutputType=amp 

If the sellers of Les Schwab run an auction-based sale Buffett won't participate.

Moat= service?

"Whether your tire is looking a little low or is downright flat, bring it in to Les Schwab. We patch, plug or fix most repairable tires free of charge to get you back on the road."

"People who are rich and run a company their grandfather started –they don’t want to hand it over to a couple MBAs who want to show their stuff. As long as we behave properly, we will maintain that asset, and many will have trouble competing with it.” Warren Buffett

4/ Les Schwab has amassed a huge real estate portfolio to 1) protect the business from a landlord's wholesale transfer pricing; and 2) to benefit from property appreciation. This business strategy is discussed in my 25iQ post on Waffle House:  https://25iq.com/2017/10/28/a-dozen-business-lessons-from-waffle-house/amp/ 

5/ Waffle House has undoubtedly made a lot of profit on real estate. A former McDonald’s CFO was once quoted as saying, “We are not technically in the food business. We are in the real estate business.” It is not uncommon for a restaurateur to retire based on real estate profits.

6/ I keep close track of these two maps as Waffle House and In-N-Out inexorably expand toward Seattle as months and years pass. There's a new In-N-Out south of Portland, which is getting closer. So I've got that goin for me, which is nice. Atlanta is Waffle House paradise.

7/ Les Schwab "is working with an adviser to weigh alternatives such as divesting its real estate portfolio, which is worth at least $2 billion. The company has $1.8B in annual revenue and more than 450 locations in 10 states."  https://www.opb.org/news/article/les-schwab-tire-centers-3-billion-dollar-sale-retail-oregon/ 

8/ "If you want to read one book that will demonstrate really shrewd compensation systems in a whole chain of small businesses, read the autobiography of Les Schwab, who has a bunch of tire shops all over the Northwest." Charlie Munger, Berkshire AGM 2004

9/ "Les Schwab made a huge fortune in one of the world’s really difficult businesses by having shrewd systems. And he can tell you a lot better than we can." Munger

"It’s an interesting book, and, you know, selling tires, how do you make any money doing that?" Warren Buffett


You can follow @trengriffin.



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