Borsheim's

Overview

Borsheim's is an Omaha-based jewelry store and a subsidiary of Berkshire Hathaway Inc. It was acquired in early 1989 (as disclosed in the 1988 Letter).

The Acquisition

Berkshire purchased an 80% interest in Borsheim's from the Friedman Family, relatives of Mrs. B.

• The Handshake: The deal was closed with a one-page contract and zero audit, based entirely on the word of Ike Friedman.
• Philosophy: This reinforced Buffett's "Trust-Based Ingestion" model for acquiring high-quality family businesses.

Business Model

Like its "sister" company, Nebraska Furniture Mart, Borsheim's operates on a simple but powerful creed: "Sell cheap and tell the truth."

• The Advantages:
  1. Single-store operation with massive inventory.
  2. Shrewd buying and rapid turnover.
  3. Incredibly low expenses.
• The Moat: By having the lowest cost structure in the industry, Borsheim's can offer prices that no competitor can match, creating a dominant market position.

Management

The business was led by Ike Friedman, whom Buffett described as a managerial genius with a character matching his extraordinary ability.

---

• Source: 1988 Letter
• Category: Retailing