Case Study - A.L. Ueltschi
Albert Lee “Al” Ueltschi (May 15, 1917 – October 18, 2012) is considered the father of modern flight training and was the founder of FlightSafety International. His company was acquired by Berkshire Hathaway in 1996 for $1.5 billion. FlightSafety would become Berkshire’s second most profitable subsidiary.
You don’t have to look much further than the table below to see why Buffett was attracted to the business:
FlightSafety shareholders had a choice to receive $50 per share in cash or $48 per share in Berkshire Hathaway Class A stock valued at $32,000 per share. Founder Al Ueltschi owned 37% of the company and elected to receive 16,000 shares of Berkshire Class A stock.
At the time of the acquisition Ueltschi would say, “I personally consider Berkshire shares to be one of the finest investments that I could make and anticipate holding the shares indefinitely.”
Warren Buffett was equally impressed with Al Ueltschi, “FlightSafety is a business that I like, run by a man I like and admire.” He would later explain, “He [Al] understood what I was about. I understood what FlightSafety was all about, and I could tell that he loved his business. The first question I always ask myself about somebody in his position is: Do they love the money or do they love the business? But with Al, the money is totally secondary. He loves the business and that’s what I need, because the day after I buy a company, if they love the money, they’re gone. If they love the business, they are there to run the company, just like before.”
Al Ueltschi’s $512 million position in Berkshire would go onto be worth over $2 billion at his death. A month prior, he signed the Giving Pledge, donating his wealth to the two charities he helped build.
Let’s back up a little bit…
How did Al Ueltschi, an airline pilot, not only create and build FlightSafety, but then dominate it’s niche of flight training for decades?
If you purchased FlightSafety’s stock when it went public in 1968 and held for 28 years until it was acquired by Berkshire Hathaway in 1996, you would have achieved a 23% compounded annual return.
The story of Al Ueltschi and FlightSafety is a great one.
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