The Fabulous Life of Sir James Goldsmith


#1

Sir James Goldsmith (Feb 26, 1933 – July 18, 1997) might be most famously known to outsiders through the fictional character that portrayed him as the corporate raider Sir Larry Wildman in the movie Wall Street. He is also famous for selling out of most of his stock market holdings (a few billion) weeks before the 1987 crash. He was described at the time as Britain’s only self-made billionaire.

Have you heard of him?

I know I haven’t, but then again I’m an American. @Trevor_Treweeke, a friend of mine, emailed me this article, and I had to dig in further.

Sir James Goldsmith was a flamboyant and opinionated British-French businessman, corporate raider, and financier whom Margaret Thatcher would say, “was one of the most powerful and dynamic personalities that this generation has seen.”

His story is more entertaining than most movies.

In 1949, at the age of 16, he dropped out of boarding school at Eton college after he had bet £10 on a three-horse accumulator at Lewes, winning £8,000 ($377,000 USD inflation/currency adjusted).

After dropping out of school he famously told his classmates, “a man of my means should not remain a schoolboy.”

He ultimately ended up chasing girls and gambling away his winnings , so he joined the army. When anyone asked him what he wanted to do with his life he would reply, “I want to be a millionaire.”

He left the army in 1953, and later that year met a Bolivian heiress of prominence and fell in love. She would become pregnant and the two eloped. She would end up dying of a cerebral hemorrhage, but the child was saved. Now it was time to get to work and support his new daughter.

He purchased the British franchise for Alka-Seltzer and parlayed that into acquiring other low cost generic drugs. He then ran a company with his brother before his brother stepped down. The company grew quickly, a little too quickly. He was cash strapped and on the brink of bankruptcy. In 1957, but was saved by a bank strike that allowed him to negotiate the sale of the company.

He didn’t let the sale get him down and quickly started a similar company and rebuilt it quickly, while also co-developing the concept of the Mothercare store chain.

Starting in 1965 he would acquire a diverse set of food companies under the name Cavenham Foods. Over a 12 year period he would grow the company from £27 million in sales and negligible profits to £1.6 billion by 1977, and into the third largest food company in Europe.

In 1969, Goldsmith founded Generale Occidentale, and French public company vehicle he used to acquire several companies and brands in France. It would become one of the largest public companies in France by the late 1970’s.

In 1973 he went to the United States looking for investment opportunities and acquired 51% of Grand Union, one of the oldest retailing conglomerates, but the acquisition would always cause him problems and never proved to be the money generator he thought it would, but would sell it at a profit years later (see below).

In 1983 – 1988 he focused solely on the United States. He was an avid reader of financial statements and tax codes and found a miscalculation that allowed timber companies to carry substantial timberland holdings at a very low valuation. He formed Cavenham Forest industries, and acquired multiple timberland holding companies and at its peak was one of the largest holders of timberland in the United States (3.5 million acres). He would end up selling pulp and paper assets to James River Corporation in 1986.

In 1987, he is most well-known for selling out of most of his stock market holdings before the crash and going to cash. He sold Grand Union for $1.3 billion after paying $125 million a decade earlier, and would retire to Mexico and his 18,000 acre estate until after the crash.

He would continue to do corporate raiding, acquired South American oil assets, and in 1989 swapped his Timber Holdings for a 49.9% ownership stake in Newmont Mining. He would sell out of his position in Newmont by 1993 while also acquiring media assets in Hong Kong.

This is just a sliver of his corporate and investment activity, but I wanted to give you a taste for how active he was across a diverse set of industries.

As we said in our latest book, intelligent fanatics aren’t perfect. Many have undesirable traits. For instance, Sir James Goldsmith openly maintained three families. Yes, he had three relationships with three different women, had children with each one of them, all at the same time. Let alone other mistresses he likely had.

But as it relates to business and finance he was quite skilled and would state in the video interview below one of his greatest attributes to his success was “adaptability to change”.

Sir James Goldsmith died of a heart attack at the age of 64. His estimated net worth was £2 billion.

It might be a stretch to put him in the “Intelligent Fanatic” category given some of his methods, but I found his story so intriguing, that I felt it deserved to be told.

There is a mausoleum site in his honor: http://www.sirjamesgoldsmith.com/

Here is a video interview with him where he shares his business philosophies, of which I’ve had [TRANSCRIBED FOR MEMBERS].


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#2

Ian -

That is one of the best interviews I have ever watched - wisdom and experience from the source.

If anyone is interested at all in business and investing, they should watch it. Put down the phone, turn off the TV and just watch it…

For me personally, at this stage of my life and business/investing career - and having come up at a time when you were taught to swim by being pushed off the dock into the lake - the familiarity in themes is both reassuring and new at the same time.

This is timeless…

Thanks for sharing!!!

John


#3

Thanks for the link to the video, and will definitely read the transcript.


#4

Great post, Ian. By the way, there is an interesting biography on Sir James Goldsmith called “Billionaire: The Life and Times of Sir James Goldsmith”, published in 1992. Worth reading, although of course many things about the way business gets done have changed since then…

I agree with John’s point, James Goldsmith, in addition to being a great businessman, had exceptional rhetorical skills, being able to take original (sometimes contrarian) points of view and make rational and persuasive arguments to support his ideas

Below are two interesting interviews:

The Money Programme: Part 2 (an example of how to win an argument by sticking to the facts…)

1994 interview with Charlie Rose on risks of GATT and globalization (quite interesting considering what happened in the following 20 years)

Thanks again for your post

Kevin


#5

Hi Ian

Thank you for this. Very interesting. Being a Brit I had heard of him and he was notorious. I will enjoy watching the videos and reading the transcript when I can find the time.

Another couple of Brits who might be worth investigating are James Hanson (who was known for saying that he always looked at not how much he could make but at how much he could lose, before acquiring a company) and Jim Slater (who when asked by the interviewer “what do you make?” Replied “oh about £x million per year”. The interviewer was expecting “widgets or shoes or cars”! He also wrote one of the few great investment books to come from this side of the pond “The Zulu Principle”.

On the non investing side Wikipedia gives his death as from Pancreatic Cance. https://en.m.wikipedia.org/wiki/James_Goldsmith#Death

Best wishes

michael