The Unlikely Strategy Behind Buffett’s Investments in Encyclopedias

Warren Buffett has eclectic taste in companies. Along with large, thriving businesses such as Geico and the BNSF Railway, he’s accumulated a collection of head-scratchers. There’s a bowling shoe brand, a maker of vacuum cleaner bags, almost three dozen newspapers, and the manufacturer of Ginsu knives.

Then there’s World Book. Once sold to millions of American families, its encyclopedias were described by Buffett as “something special” when he acquired the company. And for years he wasn’t wrong. The business mattered enough to break out its earnings in annual reports for his Berkshire Hathaway Inc.—$32 million before taxes in 1990 alone. With the ascent of the personal computer and the internet in the 1990s, sales plunged, but Buffett let the business plod along. As Berkshire grew, World Book’s results became a rounding error.