Zero to Billionaire

delfeldImagine going from 9th grade dropout to pumping gas to billionaire tycoon.

In many ways, David H. Murdock’s larger than life story similar to many of the tycoons I have profiled with the end goal of unlocking their tremendous and surprising wealth secrets.

Murdock’s father was a travelling salesman and his mother worked hard to make ends meet. He dropped out of high school in the 9th grade and after service in World War II, moved to Detroit where he fell on hard times pumping gas and living above a service station. From there it was off to Arizona where he had great success in housing construction and commercial real estate before a setback sent him to California where he really hit pay dirt in real estate and acquisitions.

In the late 1970s, he gained control of International Mining and he scored a major coup by becoming the largest shareholder in Occidental Petroleum after selling to the company his stake in Iowa Beef.

Looking further west led Murdock to Hawaii where he took over the ailing Castle & Cooke, the owner of Dole Foods. The perception was that the company would go bankrupt. Murdock saw the reality of Castle & Cooke’s unappreciated landholdings and the value of the Dole brand. Castle & Cooke controlled 98% of Lanai, the sixth largest island in Hawaii.

He soon leveraged the company’s extensive real estate holdings into high end commercial projects and turned Dole into the world’s largest producer of fruits and vegetable building on the firm’s reputation in pineapple and bananas.

Then Murdock bought Dole Foods, which had separated from Castle & Cooke and then six years later brought it public as Dole Foods (DOLE).

But the saga continues………

Dole’s business has proved volatile, subject to unexpected bouts of bad weather that have weighed on earnings. Last year, it lost $144.5 million, while sales declined 11%, to $4.25 billion.

Last September, Dole announced it would sell its packaged foods and Asian fresh fruit businesses to the Japanese trading house Itochu Corporation for $1.7 billion. And earlier this year, Dole reported a 22% decline in its first-quarter pretax profits.

This sent its shares to bargain-basement levels presenting a great opportunity to value investors.

At the grand age of 90, the gritty Murdock pounced announcing plans to buy all outstanding shares and take Dole private again. Earlier this month he completed his task.

Murdock’s personality seems to fit the usual tycoon personality profile. He is fiercely independent and clearly likes to be in charge.

What does all this mean to you as an investor? There are several important lessons from this portrait of Murdock’s life.  The majority of tycoons built their fortunes from the ground up. They like to work and usually never stop. They are persistent in a thoughtful way and patiently wait for great value opportunities. They take risks but only when the gap between perceptions and reality are wide and deep. And they make money when markets are bad and when markets are good.

Following the tycoon blueprint is not all that difficult or complicated. I have developed a formula that I will be sharing with you in the coming weeks.

And if you are fortunate or lucky enough to be a shareholder of DOLE stock, count your blessings this Thanksgiving. It is up 37% so far this year.

Opportunity awaits,

Carl Delfeld.

 

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