That would be See's Candy, which he bought in 1972 for $25 million. Since then it has earned $1.35 billion. And as Buffett points out in his annual letter to Berkshire Hathaway shareholders, only $32 million of that had to be reinvested in the candy company (it's based in South San Francisco, with kitchens in SSF and L.A.). Buffett's annual letter to shareholders, always an entertaining, highly readable summary of Berkshire's far-flung business enterprises, typically includes a company like See's that gets practically zero attention but which manages to keep making money, year-after-year. It's a reminder that despite all the turmoil on Wall Street and in the credit markets - some of it likely to impact Buffett's investments- certain industries continue to do well. The beauty of a company like See's lies in its simplicity. No concerns about changing technology or Internet impacts or global competition.
Two factors helped to minimize the funds required for operations. First, the product was sold for cash, and that eliminated accounts receivable. Second, the production and distribution cycle was short, which minimized inventories. Last year See’s sales were $383 million, and pre-tax profits were $82 million.
And to think that, as Buffett remembers, "I almost blew the See’s purchase." The seller was asking $30 million, and he didn't want to go above $25 million. "Fortunately, he caved," writes Buffett. "Otherwise I would have balked, and that $1.35 billion would have gone to somebody else."