Blue chip stamps

Sources:

"Blue chip stamps" refer to a rewards program where customers received stamps for paying with cash, which could be collected and redeemed for various prizes. This system incentivized cash payments over credit. The Blue Chip Stamp Company operated as a separate business from department stores to allow consumers to aggregate stamps across multiple stores. This business model also involved financial "float," where stores bought stamps in advance, effectively providing the stamp company with interest-free loans.

Warren Buffett and Charlie Munger capitalized on the float generated from Blue Chip Stamps. Their investment in the company allowed them to reinvest the float into other businesses, including Seas Candy and Wesco Financial Corporation. Despite the decline in the stamp business in the 1970s, the financial float from stamp sales provided a significant source of capital for Berkshire Hathaway's early investments 1 2 3.

Blue Chip Stamps

Discover the fascinating history of blue chip stamps, a unique system where customers received stamps as incentives for paying with cash. Learn how this separate business became a lucrative opportunity and the attractive qualities it possessed.
Acquired
Berkshire Hathaway Part II
1
2
3
4

Moreover, the Blue Chip Stamp Company faced legal challenges, including an antitrust lawsuit, which resulted in a consent decree requiring stores to divest their ownership. This scenario presented Buffett and Munger an opportunity to acquire a significant stake in the company at a reduced price, further solidifying their early investment strategy 4 2.

RELATED QUESTIONS