Champion International

Type: Subsidiary (Preferred Investment) Acquired: 1989 ($300 Million Convertible Preferred)

📖 Overview

In 1989, Berkshire Hathaway invested $300 million in Champion International Corporation, a major manufacturer of paper and wood products. This completed a trio of convertible preferred investments that year totaling $1.3 billion (including Gillette and USAir).

🧠 The Investment Logic

Buffett viewed Champion as a well-managed company in a cyclical, commodity-based industry.

• The Jockey and the Horse: Like USAir, Buffett classified Champion as a "good horse" in a difficult environment. The value proposition was the stability of the preferred dividend combined with an option on the company's future common stock price.
• Management: Buffett expressed high regard for the management's focus on shareholders, which was a prerequisite for Berkshire's "Analytical and Objective" capital role.

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1989 Letter | Gillette | USAir