Here’s How Warren Buffett Made Billions From An Industry He Didn’t Understand

In a surprising turn of events two decades ago, Warren Buffett invested in RV manufacturer, Forest River, a move that has proven to be a profitable venture for Berkshire Hathaway Inc. BRK. The recently passed founder of Forest River, Pete Liegl, played a significant role in this success story.

What Happened: Buffett was not familiar with the RV industry or Liegl when he was presented with a proposal to acquire Forest River. Despite his unfamiliarity, he was captivated by the business and its $800 million price tag. After a short meeting with Liegl, Buffett made an offer and the deal was finalized.

Following the acquisition, Forest River has emerged as a top RV manufacturer in the U.S., raking in roughly $6 billion in annual revenue.

According to the report by The Wall Street Journal, Liegl, who continued to manage the company post-sale, was lauded by Buffett as an “extraordinary entrepreneur” whose contributions significantly increased the wealth of Berkshire shareholders.

Also Read: Buffett’s Key Lessons in Berkshire Annual Letter: ‘Really Outstanding Businesses Are Very Seldom Offered in Their Entirety’

Despite his achievements, Liegl remained humble, upholding a strong work ethic and a direct involvement in his business. His philosophy was straightforward: “The best product at the best price is everything,” he once stated to RV Business, an industry publication.

Liegl’s legacy continues to fuel Forest River’s success even after his demise, demonstrating that Buffett’s unanticipated investment was a sound decision.

Why It Matters: This investment by Buffett underscores his knack for identifying potential in unconventional sectors. Despite his unfamiliarity with the RV industry, he saw potential in Forest River and its founder, Pete Liegl.

This decision has paid off handsomely, with Forest River now being a leading RV manufacturer in the U.S. Liegl’s philosophy of providing the best product at the best price aligns with Buffett’s own investment philosophy, further validating the decision to invest.

This story serves as a reminder of the importance of vision and the ability to identify potential in unexpected places.

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