Monday, September 2, 2013

A Nebraska Portfolio for Creating Wealth

A Nebraska Portfolio for Creating Wealth

Michael is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
If you want to get rich, invest in Nebraska. Nebraska is home to five great publicly-traded companies. These companies have long histories of profitability and creating shareholder value.
Living in Nebraska for 19 years, I gained a keen insight into its business, an understanding of its politics and a love for Big Red Football. With only 1.8 million people, Nebraska relies on ingenuity, hard work and efficiency to cover the needs of its people. Nebraska has the only unicameral legislature in the country, meaning bills must go through only one house, not two, before going to the governor for signature – a sign of efficiency.
Nebraska is a state of entrepreneurs. Several years ago, The Omaha World-Herald published an article showing at least 100 families in Omaha were worth $100 million or more. Some of them got rich investing with Warren Buffett, but many of them made their fortunes by starting businesses that grew into substantial enterprises, such as Peter Kiewit (construction) Willy Theisen (Godfather’s Pizza) and Roy Dinsdale (banking and agriculture.)
The Nebraska portfolio
Based in Omaha, Berkshire Hathaway's (NYSE: BRK-B) stock is up 24.77% year-to-date through June 30, up 34.31% over the past year and up 39.48% over the past five years. Buffett, the chairman and CEO, has said it will be difficult to achieve the 20% average annual returns that he has earned since he took over the company because the company is so large now. He aims to continue beating the S&P 500, however. Critics are worried about the company after Buffett dies, but advocates know that Buffett has spent much of the past 10 years preparing the company for his departure. Berkshire Hathaway owns over 80 great companies, including Burlington Northern Santa Fe Railroad.
The Buckle (NYSE: BKE), based in Kearney, has seen its stock climb 16.53% year-to-date through June 30, up 31.46% over the past 12 months and up 70.63% over the past five years. The clothing retailer specializes in the sale of jeans, shirts and accessories in 443 stores, mostly in malls in the Midwest. The Buckle has $144 million in cash and no debt and pays a 1.54% dividend. In addition, the company has paid a special dividend every year for the past five years in the fall. Last fall the special dividend was a 10% of the stock price.
Union Pacific Corp. (NYSE: UNP) has seen its stock climb 22.72% year-to-date through June 30, up 29.31% over the past 12 months and up 104.34% over the past five years. Based in Omaha, Union Pacific is the largest railroad in the United States. The company saw declines in shipments of coal and grain over the past year, but has made it up in the movement of crude and intermodal shipments. It would be virtually impossible for another company to build a 32,000-mile network of rail to compete against Union Pacific. Acquiring the land alone would be cost prohibitive. Union Pacific is a stock to own for a lifetime. Union Pacific pays a 1.79% dividend.
ConAgra Foods (NYSE: CAG) is a food giant based in Omaha. Its stock has climbed 18.41% year-to-date through June 30, up 34.71% over the past 12 months and up 81.17% over the past five years. ConAgra sells packaged food products such as Chef Boyardee and Orville Redenbacher popcorn. ConAgra pays a 2.86% dividend.
Valmont Industries (NYSE: VMI) is an Omaha-based manufacturer of irrigation equipment, utility poles and engineered-structures for traffic. The company has seen tremendous growth in irrigation equipment sales due to drought in 2012. The company also has seen a lot of sales growth in utility poles as utilities upgrade their electric networks. Valmont stock was up 4.79% year-to-date through June 30, up 18.29% over the past 12 months and up 37.2% over the past five years.
The Foolish bottom line
I started buying Nebraska-based publicly traded companies in the mid-1990s and have been richly rewarded for holding onto them. I did not sell out when the recession struck in 2008, but instead bought more of these stocks, especially Union Pacific and The Buckle. I now live in Kansas, but I still have a lot of investments in Nebraska.
Nebraska is home to some of the greatest companies in the world. Warren Buffett has taught many Nebraskans how to create profits in business. If you buy these companies, hold onto them through good times and bad times. The long-term outlook for all five of these companies is excellent.
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Michael Hooper owns shares of Berkshire Hathaway, Union Pacific, The Buckle and ConAgra. The Motley Fool recommends Berkshire Hathaway and The Buckle. The Motley Fool owns shares of Berkshire Hathaway and The Buckle. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insights makes us better investors. The Motley Fool has adisclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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