How to Follow the Tycoon’s Blueprint

by Carl Delfeld

Imagine going from high school dropout to pumping gas to billionaire tycoon.

That's what David H. Murdock did. His larger-than-life story holds many lessons for investors.

The son of a traveling salesman, Murdock dropped out of school in the ninth grade, and spent time after serving in World War II living above the Detroit service station where he pumped gas, barely scratching out a living. He moved to Arizona, where he had great success in housing construction and commercial real estate. A downturn in the market there sent him to California, where he continued developing real estate deals, becoming even more successful.

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

Taking Dole

In 1985, Murdock took over the ailing Castle & Cooke, the owner of Dole Food (NYSE: DOLE). The perception was that the company would soon go bankrupt. Murdock saw 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 while turning Dole into the world's largest producer of fruits and vegetables. He took Dole public in 2009, but the business has proved volatile. Last year, it lost $144.5 million, while sales declined 11%, to $4.25 billion. And last month, Dole reported a 22% decline in its first-quarter pretax profits.

So now at the age of 90, the gritty Murdock announced plans to buy all outstanding shares and take Dole private again. Murdock's personality seems to fit the usual tycoon personality profile. He is fiercely independent and clearly likes to be in charge.

What It Means to You

Most 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.

If you are fortunate or lucky enough to be a shareholder of DOLE stock, count your blessings. It is up 29% so far this year.

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