It seems like these past couple of weeks my blog has become
the Koch blog making me a Koch addict! I promise to stop as soon as the news
about them stops. Today there was interesting
article in the Wichita Eagle today explaining how Koch Industries has
grown. I covered the growth of Koch
Industries in the 1990’s here.
Last year (2011) Koch Industries had $110 billion in revenue
which is a far cry from 1967 when revenues were $200 million with $6 million in
profit and 600 employees. The company now has 60,000 employees and the company
plans to make more revenue than they did last year. Dave Robertson who is the
president and chief operating officer of Koch Industries (has been with the
company for 28 years) claims the company may build a 200,000 square foot
building to accommodate 600-700 employees.
People also I believe forget how diversified Koch Industries
is. The company has become much more diversified
than 2000. Many people claim it is just oil and gas but that clearly is not the
case. The company makes paper towels, carpet fibers, pipelines, fertilizer, ranches,
has a financial trading company, creates clean water, and even toilet paper. So
really Koch is even helping liberals clean up!
Clearly, this company is not just oil and gas but a well
diversified company. The company truly believes in making people’s lives better
by creating products and services that create value. The company even competes
with itself. If someone outside of the company can do a better more efficient job
than Koch will outsource that job. Koch Industries is privately held (oh I wish
I could be a shareholder!) but they only have three groups of shareholders
which allows them to approve something quickly if they want to instead of
having it be voted of millions of different shareholders. Also since the
company is private it doesn’t have to meet quarterly numbers (which I think is positive).
$1,000 invested in Koch Industries would
have been worth $2 million in 2007 (16 times better than the U.S. stock
market).This makes sense because why should a quarterly number affect how
people view a business in 20-30 years? Few Fortune 500 companies have a long-term
view on things. Charles Koch points out in
a lunch interview that if Koch were a public company he would have been fired a
long time ago. Speaking of lunch Charles Koch doesn’t mind
eating M&Ms (also made by another private company) along with chicken
with 40 cloves of garlic. Apparently the
M&M chairman told Charles chocolate was good for him (Charles was being facetious
of course).
Of course Charles Koch is interested in the present value of future
cash flows and how to create long term value.
The company also doesn’t like debt and continues to plow back 90% of
their earnings into the company giving shareholders a 10% dividend. According to Dave Robertson buying a future
company (similar to what they did when they purposed Georgia Pacific) may be in
their future. I have a feeling Koch Industries will only make a deal if it
makes sense and as long as it adds long-term growth.
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