The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [122]
Cash on the barrel from Hayden Ahmanson sounded good to some of the farmers compared to their worthless certificates. Though they had paid around $100 per share many years before and were only receiving $30, many of them had gradually convinced themselves that they were better off without the stock.
Warren was determined. “I looked it up in some insurance book or something. If you went back to the twenties you could see who were the directors. They made some of these bigger stockholders the directors from the towns they worked the hardest for sales. There was a town called Ewing, Nebraska, which has got no population at all. But somebody sold a lot of stock out there. And that’s how they probably got the local banker on the board thirty-five years earlier.”
So Dan Monen, Warren’s partner and proxy, went off to the countryside carrying wads of Warren’s money and some of his own. He cruised around the state in a red-and-white Chevrolet, showing up in rural county courthouses and banks, casually asking who might own shares of National American.26 He sat on front porches, drinking iced tea, eating pie with farmers and their wives, and offering cash for their stock certificates.27
“I didn’t want Howard to know because I was topping his price. He had been picking it off at thirty bucks, and I’d had to raise the price some. The shareholders had been listening for probably ten years at thirty bucks, so it was the first time the price moved.”
The first year Warren paid $35 each for five shares of the stock. The farmers’ ears pricked up. Now they realized that buyers were competing for the stock; they began to think maybe they weren’t better off without it. The price had to keep moving up. “Finally, toward the end, I paid a hundred. That was the magic number, because it was what they’d paid in the first place. A hundred bucks, I knew, would bring out all the stock. And sure enough, one guy came in when Dan Monen was doing this and he said, ‘We bought this like sheep, and we’re selling it like sheep.’”28
That they were. Many had sold at less than three times the $29 a year the company was earning. Monen eventually accumulated two thousand shares, ten percent of National American’s stock. Warren kept it in the original shareholders’ names, with a power of attorney attached that gave him control, rather than transferring it into his name. “That would have tipped Howard off to the fact that I was out there competing with him. He didn’t know. Or, if he did, he had insufficient information. I just kept collecting shares. Then, the day I walked into Hayden’s office, I plopped them all down and said I wanted to transfer them to my name. And he said, ‘My brother’s going to kill me.’ But in the end, he transferred the stock.”29
The brainstorm behind Warren’s National American coup had been more than just the price. He had learned the value of gathering as much as possible of something scarce. From license plates to nuns’ fingerprints to coins and stamps, to the Union Street Railway, and National American, he had always thought this way, a born collector.30
Alas, this voracious instinct could steer him awry on occasion. Tom Knapp, who had gone to work for a small broker, Tweedy, Browne and Reilly, after helping Jerry Newman close down the remnants of Graham-Newman, came out to visit Warren and to go hear Ben Graham give a speech in Beloit, Wisconsin. Driving through the Iowa cornfields on the way, Knapp mentioned that the U.S. government was about to take the four-cent Blue Eagle stamp out of circulation. The cash register dinged! in Warren’s head. “Let’s stop at a few post offices and see if they have any four-cent stamps,” he said on the way back. Knapp went into the first post office and returned to say that it had twenty-eight stamps. “Go buy them,” said Buffett. They talked