Warren Buffett made his best returns in the 1950s.
The early 1950s.
During those years, he was compounding north of 50% a year.
He hadn’t opened his partnership yet, and was working with a tiny amount of money.
And that let him do something.
Something he couldn’t do anymore once his capital base grew.
He could buy cigar butts.
Small companies so cheap that finding one was like finding a cigar butt on the street with one puff left. Picking it up cost you nothing, so that last puff was pure profit.
Today’s company is one of those.
A cigar butt at dirt cheap multiples.
It trades at 4.8x earnings, 0.4x book value, and 1.4x EV/EBIT.
About ten years ago, the business went through a turnaround. It cut costs and improved margins.
Earnings started to grow, and converted directly into cash flow. And they put that cash to good use.
They deleveraged the company and started paying a fat dividend.
A dividend that now pays you 12% while you wait for a rerating.
Let’s take a closer look.