Forest River
Company Overview
Forest River is one of the largest manufacturers of recreational vehicles (RVs), campers, and cargo trailers in the United States. Berkshire acquired Forest River from founder Pete Liegl in August 2005 for approximately $800 million.
Investment Story
2005: Acquisition from Pete Liegl. Pete Liegl founded Forest River in 1996 after selling a prior RV company, and built it into one of the industry's largest producers in under a decade through a relentless focus on cost efficiency and dealer relationships. Buffett acquired the company after a straightforward conversation with Liegl.
The RV market. Recreational vehicles are highly cyclical, tracking consumer discretionary spending and gasoline prices. Forest River manufactures across multiple RV categories — travel trailers, fifth-wheels, motorhomes, cargo trailers — serving dealers across North America. The industry's cyclicality means revenues can swing 30-40% between peak and trough years.
Post-acquisition growth. Forest River has grown dramatically under Berkshire's ownership, both organically and through acquisitions, becoming one of the two dominant manufacturers in the U.S. RV market alongside Thor Industries. Annual revenues have grown from roughly $2 billion at acquisition to over $10 billion by 2022 — one of the most substantial revenue growth achievements in Berkshire's portfolio.
Buffett's Own Words
(1) not using borrowed funds except for very occasional reserve balancing transactions; (2) maintaining a liquidity position far above average; (3) recording loan losses far below average; and (4) utilizing a mix of over 50% time deposits with all consumer savings accounts receiving maximum permitted interest rates throughout the year. This reflects a superb management job by Gene Abegg and Bob Kline. \n3 Interest rates received on loans and investments were down substantially throughout the banking industry
(1) not using borrowed funds except for very occasional reserve balancing transactions; (2) maintaining a liquidity position far above average; (3) recording loan losses far below average; and (4) utilizing a mix of over 50% time deposits with all consumer savings accounts receiving maximum permitted interest rates throughout the year. This reflects a superb management job by Gene Abegg and Bob Kline. Interest rates received on loans and investments were down substantially throughout the banking industry during 197
Manufacturing capabilities have been restructured to complement our sales strengths. Helped by the industry recovery, we experienced some payoff from these efforts in 1972. Inventories were controlled, minimizing close-out losses in addition to minimizing capital requirements; product mix was greatly improved. While the general level of profitability of the industry will always be the primary factor in determining the level of our textile earnings, we believe that our relative position within t
The textile business has been highly cyclical and price controls may have served to cut down some of the hills while still leaving us with the inevitable valleys. Because of the extraordinary price rises in raw materials during 1973, which show signs of continuing in 1974, we have elected to adopt the “lifo” method of inventory pricing. This method more nearly matches current costs against current revenues, and minimizes inventory “profits” included in reported earnings. Further information on this change is includ
Very low levels of housing starts also serve to dampen demand. In addition, retailers have been pressing to cut inventories generally, and we probably are feeling some effect from these efforts. These negative trends should reverse in due course, and we are attempting to minimize losses until that time comes. Insurance Underwriting In the last few years we consistently have commented on the unusual profitability in insurance underwriting. This seemed certain eventually to attract unintelligent competition with cons
Investment Lessons
Founder-managers with unconventional talent can build businesses faster than institutional capital. Pete Liegl built Forest River from nothing to $2 billion in revenue in under a decade — a growth rate that institutional capital allocating into existing RV companies would struggle to match. Recognizing and backing exceptional founder-operators, even in cyclical industries, can generate extraordinary long-term returns.
Cyclical businesses with low-cost positions outperform over cycles. Forest River's cost efficiency — built under Liegl's obsessive attention to operational detail — allows it to remain profitable at volumes that force higher-cost competitors into losses during downturns. The low-cost position is the primary competitive advantage in a commodity-adjacent market where product features are relatively uniform.