The Sainted Seven

The Sainted Seven was the term used in the late 1980s (formally introduced in the 1987 Letter) to describe Berkshire's seven largest and most profitable non-financial subsidiaries.

🏆 The Members

1. Buffalo Evening News (Newspaper)
2. Fechheimer Bros. Co. (Uniforms)
3. Kirby (Vacuum Cleaners)
4. Nebraska Furniture Mart (Furniture)
5. Scott Fetzer Manufacturing Group (Diversified mfg)
6. See's Candies (Confectionery)
7. World Book (Encyclopedias)

📊 Economic Performance

In 1987, these seven units produced extraordinary results that Buffett used as a benchmark for business excellence:

• Combined Pre-Tax Earnings: $180 million.
• Combined Net Earnings: ~$100 million.
• Return on Equity (ROE):
  • 1987: 57%
  • 1988: 67% (on average equity capital, with no financial leverage).
• Capital Intensity: Very low. Practically all earnings were available for deployment elsewhere as these businesses required very little capital to grow.

🧠 The Managerial Factor

Buffett attributed this success to the individual "virtuoso performances" of their managers:

• The Blumkins (NFM)
• The Heldmans (Fechheimer)
• Chuck Huggins (See's)
• Stan Lipsey (Buffalo News)
• Ralph Schey (Scott Fetzer/Kirby/World Book)

📍 Significance

The "Sainted Seven" represented the ideal Berkshire subsidiary: a dominant market position (The Moat), run by an ethical and autonomous manager, generating high returns on capital without needing external debt.

"If these seven business units had operated as a single company... you’ll seldom see such a percentage anywhere, let alone at large, diversified companies with nominal leverage." — 1987 Letter

🔄 Evolution: "The Sainted Seven Plus One" (1989)

In the 1989 Letter, the group was expanded to include Borsheim's, the jewelry giant acquired in early 1989.

• The Member: Borsheim's
• Manager: Ike Friedman
• Performance: While the average ROE for the group was slightly diluted by the acquisition cost of Borsheim's (which adds more "Equity" to the calculation than the older, depreciated assets of See's or NFM), the group continued to achieve returns on equity far above 50%.

🔗 Connections

• Source: 1987 Letter, 1989 Letter
• Entity: Borsheim's
• Entity: Berkshire Hathaway Inc.