Donald and Mildred Othmer were almost billionaires because they invested very early with Warren Buffett. They amassed a fortune of $800 million before both passed away. The story of Donald and Mildred Othmer is interesting since they amassed their wealth by investing with Warren Buffett and they lived frugally and were buy-and-hold investors. It is similar to the story of Stewart Horejsi, who also invested with Buffett and is worth about $4.3 billion today, according to Forbes. The Othmers invested in one of Warren Buffett’s early investment partnerships and eventually became early shareholders of Berkshire Hathaway stock. The rest is history.
Affiliate
The Sure Dividend Newsletter for high-quality dividend growth stocks.
- The monthly newsletter includes stock analyses, portfolio ideas, dividend risk scores, real money portfolio, etc.
- Risk free 7-day free trial and $41 off only through Dividend Power for $158 per year.
- Sure Dividend Coupon Code – DP41S
Click here to try the Sure Dividend Newsletter (7-day free trial).
Who Were Donald and Mildred Othmer?
Donald and Mildred Othmer were Omaha natives who eventually settled in New York City (NYC). Donald Othmer was a renowned professor of chemical engineering at Brooklyn Polytechnic Institute, now New York University Tandon School of Engineering. Before becoming a professor, he was an engineer at Eastman Kodak, producing 40 patents. He was also the co-editor of the Kirk-Othmer Encyclopedia of Chemical Technology. His second wife, Mildred Othmer, was a teacher and buyer for her mother’s dress store in Omaha. He died in 1995 at the age of 91, and she died in 1998 at the age of 90.
How Did the Othmers Become Wealthy?
The Othmers initially invested $25,000 each with Warren Buffett for a $50,000 total investment in the 1960s. Buffett generated a 29.5% annualized return before fees between 1956 and 1968. Assuming the Othmers invested during this time means that their initial $50k turned into $1.062 million before fees.
However, Buffett eventually stopped buying stocks. He felt finding undervalued companies in the stock market was becoming more difficult. In the 1960s, the stock market performed relatively well, and Buffett closed his partnership to new investors in 1966. Instead, he started buying private businesses outright. He bought Berkshire Hathaway in 1965.
Buffett had his best year in 1968, beating the Dow 30 by over 50%. In 1969, he announced that he was liquidating his partnership. Buffett suggested investing with Bill Ruane and the Sequoia Fund. In addition, he offered partners a choice of cash or converting to Berkshire Hathaway stock.
Many investors chose cash, but the Othmers chose wisely. They received about 14,500 shares at $42 per share of Berkshire Hathaway stock in 1970. The Othmers were buy-and-hold investors and never sold a single share. Even though Berkshire Hathaway’s share price dropped 48.7% in January 1974, they did not sell. The stock dropped precipitously again in 1990 by 23.1%, but they did not sell.
Their reluctance to sell resulted in enormous gains over many years. Donald’s ~7,000 shares were sold in 1995 at just under $30,000 per share for approximately $210 million. Mildred’s shares were sold in 1998 at just under $77,250 per share for around $578 million. The combined value of their shares when sold was almost $800 million. Hence, the Othmers nearly became Buffett billionaires.
What Happened to the Othmers Fortune?
Donald and Mildred Othmer had no children. As a result, most of their wealth was donated to charities and non-profit organizations. Brooklyn Polytechnic Institute received $190 million, where Donald worked for nearly 60 years as a professor of chemical engineering. At the time, the gift was four times the entire endowment.
The Long Island College Hospital, where he was a board member, received about $160 million. The University of Nebraska-Lincoln was bequeathed $140 million. Both Donald and Mildred Othmer graduated from the institution. The Chemical Heritage Foundation of Philadelphia received $125 million. Additionally, Planned Parenthood of New York City, on whose board Mildred Othmer served, received about $75 million. The Brooklyn Historical Society was left with $16 million, and the Omaha Board of Education $12 million. Other people and institutions received smaller amounts.
Final Thoughts About the Othmers
The Othmer’s story is like that of Stewart Horejsi, a buy-and-hold Berkshire Hathaway billionaire. They were not investing geniuses. However, they made an intelligent decision to invest and stick with Warren Buffett. The returns in an up year were great. Down years occurred but not often, and usually, losses were less than the broader market.
Most retail investors won’t achieve this kind of success, but some will. Many secret dividend millionaires earned six-figure and seven-figure fortunes through saving, frugality, and investing in stocks and holding them for decades. For instance, Russ Gremel bought Walgreens Boots Alliance (WBA), owning only one stock, and became a divided millionaire. In another example, Sylvia Bloom became a dividend millionaire by owning Exxon Mobil (XOM) and Colgate-Palmolive (CL) stocks. Similarly, Anne Scheiber bought Coca-Cola (KO) and Merck (MRK) stocks and built a fortune.
There are other examples as well. However, all these investors had one thing in common: they followed the three principles of dividend millionaires.
- They spent less than they earned
- Invested their savings
- Reinvested the dividends
Related Articles on Dividend Power
Here are my recommendations:
Affiliates
- Simply Investing Report & Analysis Platform or the Course can teach you how to invest in stocks. Try it free for 14 days.
- Sure Dividend Newsletter is an excellent resource for DIY dividend growth investors and retirees. Try it free for 7 days.
- Stock Rover is the leading investment research platform with all the fundamental metrics, screens, and analysis tools you need. Try it free for 14 days.
- Portfolio Insight is the newest and most complete portfolio management tool with built-in stock screeners. Try it free for 14 days.
Receive a free e-book, “Become a Better Investor: 5 Fundamental Metrics to Know!” Join thousands of other readers !
*This post contains affiliate links meaning that I earn a commission for any purchases that you make at the Affiliates website through these links. This will not incur additional costs for you. Please read my disclosure for more information.
Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.