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Home furniture retailer RH (NYSE:RH), formerly known as Restoration Hardware, took a page out of Warren Buffett's investment playbook, according to RH CEO Gary Friedman.
Warren Buffett made billions by loaning capital at the height of the 2008 financial crisis to worthy companies that hit a temporary roadblock — a strategy Friedman figured would work for RH nearly a decade later, the executive told CNBC's Jim Cramer during his daily "Mad Money" show Thursday.
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Brand Transformation Pays Off
RH was near its lows last year, when the company was viewed unfavorably by investors as it was undergoing a transformation, including a name change and a business shift from a promotional model to a membership model. The company was able to secure $600 million through convertible bond offerings.
Friedman said he saw an opportunity to mimic Buffett and invest in an underappreciated company with tremendous prospects: his own.
The strategy paid off, with RH's stock soaring from below $30 at its 2017 lows and peaking Thursday just below $165. The strong gains look even more impressive when considering RH was one of the most shorted stocks in the entire market.
"We said, 'look, if [investors] don't want to bet on us, we'll bet on ourselves," the executive said. "And so we took the money on the balance sheet, we raised some other capital and we bought back half the company."
Related Links:
RH Surges 35% After Q1 Earnings: Here's What Wall Street Thinks
Restoration Hardware: The Next Retailer To Breakout?
Photo via Wikimedia.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.