This Day In Market History: Warren Buffett Buys Nebraska Furniture Mart For $55.3M

Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.

What Happened? On this day in 1983, Warren Buffett’s Berkshire Hathaway, Inc. (NYSE: BRK-A) (NYSE: BRK-B) acquired Nebraska Furniture Mart for $55.35 million.

Where The Market Was: The Dow Jones Industrial Average closed at 1,196.04 and the S&P 500 traded at 162.58.

What Else Was Going On In The World? In 1983, U.S. President Ronald Reagan order the invasion of Grenada to protect American citizens in the country and stem the spread of communism in the Caribbean. The video game “Mario Bros” was first released in Japan. U.S. interest rates finished the year at 11%.

What Is The Buffett Indicator?

Buffett’s Hometown Buyout: On his 53rd birthday, Warren Buffett acquired an 80% ownership stake in Nebraska Furniture Mart in a handshake deal with 89-year-old founder Rose Blumkin.

Blumkin founded Nebraska Furniture in Buffett’s hometown of Omaha in 1937 when Buffett was just 7 years old. Buffett reportedly purchased the business based in part on his own experienced shopping at the Omaha store and the local reputation of the Blumkin family.

“Though the company’s financial statements were unaudited, I had no worries,” Buffett said of the deal in Berkshire’s 2013 shareholder letter. “Mrs. B simply told me what was what, and her word was good enough for me.”

Rose Blumkin reportedly took out a $500 loan to found the business in 1937, suggesting her compound annual return on investment was about 29% when she sold the company to Buffett.

Photo credit: bunnicula, Flickr