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From over at Eyes on the Wise
            INTELLIGENT BUSINESSLIKE INVESTMENT

Take a trip with me…and be prepared to meet some interesting people.

It's not everyday that I have to wait for a plane, but it was a bit short notice and if Mother Earth ever had a butt, this town surely was slap bang in the middle of it. So there I was, relaxing on a bench outside the only diner in town with my feet up on a crate whilst sipping on a strawberry milkshake (homemade and to die for). It was quite amazing, because first of all, with my head up against the wall behind me, I could take in the entire main street simply by rolling my eyes from side to side. Secondly, everything came to a standstill from about two in the afternoon. The gas station owner simply left his shop open and strolled over to us. The barber, who was sipping on a Budd, was sharing some stories with me and kindly introduced me to Jo Rosenfelt whom apart from being the owner of the gas station was also a part-time farmer. After a while they went to the barbershop, which was next to the diner, for Joe to get a haircut. It has been a while, since I saw someone walk out of a shop and leave it unattended. Not that it was a problem, because nobody pulled up for gas in the time that I was there anyway.

Joe Rosenfelt?? Joe Rosenfelt?? Of course, Jason Zweig's article on Joseph (Joe) Rosenfield. In it he wrote, “You've probably never heard of Joe Rosenfield, but trust me: You can learn a lot from him.”

It's a big thing for me, learning from other people that is. I made a mental note at the time. Got to read up on Buffett's hero, Joseph Rosenfield. Another line I remember from Zweig's article was Joe's quote, "There's all kinds of propaganda making people believe that impatience will pay off, but impatience is a sure way to lose money. I've always taken the long view." He added with a grin: "I've got nothing but time. "The man said this on his 96 birthday! So there I was in this one horse town with nothing, but time on my hands. Man it felt great for a change just to kill some time! So I took the 86-yard amble over to the library after J.D. (the barber) informed me that it is where I will find one of three Internet connections in town. My, oh my, was I in for a treat. I spent the next hour and a half in Joe's world. What a guy!

Joe Rosenfield spent about 20 years practicing law, after graduating from Iowa Law School in 1928. He was chairman of Younkers Brothers Inc and a director of General Growth Properties. His most famous job was that of managing Grinnell College's endowment fund. He had a little help from his friends. Giants like Warren Buffett, William Ruane and Richard Cunniff (Sequoia fund), Steven Jobs (Apple Computer), Robert Noyce (Intel) and James Gipson (Pacific Financial). My dad always said that you know a person by the company that he keeps. Say no more. Having friends like these and a success record like his only makes Joe Rosenfield's most respected trait all the more impressive. Modesty. He never even read the brilliant article Jason Zweig wrote about him (link here with others http://futile.free.fr/jrus.html) Although there were copies around the house his great-nephew, Jason Fairfield, reported that he wouldn't read it. All he wanted to know from Fairfield's grandmother was whether Grinnell came off well in the article. On having heard this Jason Zweig responded by saying 'It would not surprise me a bit if Joe Rosenfield died without having read my article. I've never met anyone else who combined such great intelligence and ability with such genuine modesty.'

It is in this area where Joe made the biggest impression on me. He was an extremely talented individual that took those talents and applied it unselfishly, to improve the lives of generations to come. He effortlessly glided over the trappings of the world of money management. No vanity, no fast cars and no big houses, just the welfare of others.

So how did Joe get to be called things like the 'guardian angel' on Grinnell's board of trustees? Simply, because the man was an investment genius that cared more for Grinnell's money than his own. He "is a triumph of rationality over convention" as Buffett's puts it. He believed you should sit still and occasionally do a few things well. Yet the proof is in the pudding, right? OK be prepared to drop your jaw or yaw as they would say in this one horse town.

Des Moines Register and Tribune Joe bought 30,000 shares @ $16 in 1982 and then the paper got taken over in 1984 @ around $140 per share. 775% in two years or a compounded 196%!

Bham!!! Out the ballpark, thank you very much.

Unfortunately Grinnell didn't have a large percentage of the fund's money in the Tribune, according to Buffett. The big hits were Intel and Avco's Dayton, Ohio TV station. Grinnell picked up the station for $12.9m, but only after a two-hour presentation from Buffett. It was sold five years later for $50m. Compounded growth rate over the five years? 32%! This time Grinnell bet big and doubled its fund over the five years.

Bham!!! Out the ballpark, once again.

For the Intel story we have to skip back a little bit. In the 1960's Robert Noyce got the not so bright idea to steal a 25-pound pig from a nearby farm and have a huge roast with some friends.
Unfortunately, for him he was caught and got expelled.
Lucky, for him he was his physics professor's best student ever and the professor got his sentence reduced to a one-semester suspension. In 1967 Noyce returned the favor by offering Grinnell a stake in his start-up company, NM Electronics. Rosenfield replied by saying Grinnell would buy all the stock they could get. 11 years later the $100,000 investment already grew to $12.7m and thereby compounded by 55% over 11 years!!

Bham!!! Out the ballpark………again!

By now you should get the idea. Joseph Rosenfield was good. In fact he was way better than good. The man simply was an investment genius. He bought Berkshire Hathaway at $17.50 in 1967 shortly after he met Buffett. In 1987 Joe said that he would think of selling one share if Berkshire passed the $5,000 mark to recoup the original investment of 300 shares. Oh, man this stuff has to make you chuckle. At the time Berkshire was selling for $4,000 and therefore compounded by 31% over 20 years!!!
Joe bought Freddie Mac in its infancy and thanks to him Grinnell has over $600m in Sequoia today. Although he believed selling was indistinguishable from error he did make some mistakes. He sold out of Berkshire Hathaway and Intel. Berkshire for $3.7m in the early 90's, which still meant he compounded his returns by a whopping 30%.

However, for the most part he believed 'sell' to be a four-letter word. He believed in concentrating his investments. In 2000 he held 20 stocks, which included the 10 stocks that was held in the Sequoia fund at the time. He made most of his returns from less than 6 stocks. Reminds me of what Charlie Munger said. That Buffett made most of his money from less than 10 great ideas.

Yet again, I have to mention the interesting people that just keep on popping up when you read up on Joe Rosenfield. Unfortunately we won't be able to discuss all of them, but the following should give you an idea. Where did Rosenfield meet Buffett? At a meeting with Martin Luther King, which gave a speech at Grinnell. For a less famous, but nevertheless impressive character we can look at one of Rosenfield's investments Dial Financial Corp. A gentleman called Ellis Levitt ran it. He was known for giving you a card with a quote on it, rather than a business card. Quotes such as,

"Confucius say: Man who associates with smarter men than himself is smarter than the men he associates with."

                            or


"Show me a man who's afraid of a new idea, and I will show you a coward."

                      and his signature slogan


"There's no fun like work." no fun like work,"

Joe was chairman of Younker Brothers Inc, which was the largest department store chain in Iowa and Nebraska by 1987. Three brothers Lipman, Samuel and Marcus started the business in 1856 after they came out from Poland. It listed on the Nasdaq in 1992, but today it is part of the Saks Department Store Group after Proffitt's purchased it in 1996. Its story can be found here http://www.saksincorporated.com/our_stores/store_histories/YNKhistory.html

Then there is Jim Hoak from Heritage Communications (Des Moines, Iowa), which got coaxed into the communications business by Joe. Joe hung out with Buffett, Buffett hung out with Tom Murphy and the next thing you know, Jim Hoak was hanging out with Tom Murphy. Also mixed in with all of this is the Hubbells. Then again just about everyone in Des Moines know the Hubbells, because they are one of Iowa's most prominent families. This is mainly due to Frederick M. Hubbell, who accumulated tremendous wealth in the late 1800's and early 1900's. Frederick M. Hubbell is another subject worthy of research. He was notorious for being one of the shrewdest businessmen Des Moines ever produced. I came across what has to be one of the best investment/business quotes I have ever heard. However, for one to fully appreciate it we will have to skip back to the Levitts. I am going to dig in a bit, because the Levitt's story is one of those great old American business stories.

Jacob Levitt was a Lithuanian Jew (same as Mrs. B from Nebraska Furniture Mart, if I am not mistaken) who fled to America to escape the czar. Apparently he was so taken by the ideals and freedoms of America that he named his son Ellis I. Levitt after Ellis Island. In 1898 he started a consumer loan business called State Loan. Ellis joined the company in 1912 and quickly took to the business. Jacob thought Ellis was very cable and one day in 1914 he sent him off to the now old, but sagacious and shrewd as ever Frederick M. Hubbell. Ellis needed to negotiate a real estate deal. It seems that Jacob was very self-conscious about his foreign accent and this might have been the main reason why he sent Ellis. As Jamie Buelt describes in a 1991 Des Moines Business Record article,

Ellis, who had a penchant for organization, painstakingly prepared his presentation for the shrewd Hubbell. Understandably excited by the opportunity, Ellis blurted out, "You have to admit, Mr. Hubbell, that it's worth what we're asking."

Hubbell leaned forward, putting his arm around the young lad, and said, "Any goddamn fool with money can buy something for what it's worth."

"F.M. Hubbell made one hell of an impression on my father that day," Richard Levitt (Ellis's son) said, smiling.


Maybe it's just me, but that is a great quote.

"Any goddamn fool with money can buy something for what it's worth."

I am afraid that's about it folks. The barber's brother came to fetch me and kindly took me to the local airstrip, which is twice as long as the town's main street. Nevertheless, I will always remember that one horse town as the place where I got to know a little bit about the legendary Joseph Rosenfield. Though, there is a twist to this tale with which I will leave you. At the beginning of the story I told you something that Joe said on his 96 birthday. He was expounding on the perils of short-term investment. He said, “I've always taken the long view." He added with a grin: "I've got nothing but time." Three weeks after Joe said that he passed away.

However, as the plane banked I looked down over that small town and thought to myself, a life like Joe's got time beyond death. I never physically met the man. Yet, he made a huge impression on me in less than two hours, simply by reading stories about him. Stories he refused to read himself. It is people like him that make me proud to be an allocator of capital. They give our industry a good name and more than counterbalance the greed and shamelessness, which plague this field of business.

Long lives Joe Rosenfield!!

Whatever you are up to, I hope it is profitable and ethical!

Mr. B




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