Hochschild, Kohn & Co

Hochschild, Kohn & Co. (HK) was a privately owned Baltimore department store and the partnership's first entire business acquisition via negotiation.

📝 The Acquisition (1966)

• Scenario: In the first half of 1966, the partnership and two 10% partners purchased 100% of the stock.
• Evaluation: Buffett assessed both quantitative (assets/price) and qualitative (management/position) factors. He noted that even if the price were cheaper, he wouldn't have bought it if the management group weren't "topnotch."
• Operation: Buffett planned to keep the existing personnel, noting their excellence. He emphasized a hands-off approach to operations.

💰 Role in the Portfolio

Despite the public nature of the deal, Buffett noted that HK represented only about 10% of BPL assets (approx. $50 million was invested in marketable securities at the time). He used HK as an example of his "iceberg approach" to disclosure, where large positions often remain hidden from public view.

🔗 Connections

• Source: 1966 Letter
• Category: Control Situations