On the 50th anniversary of Berkshire Hathaway, the investment fund-cum-industrial conglomerate that now employs 341,000 people and is the fourth most valuable company in the US, the question is: is Warren Buffett inimitable? Or could the Sage of Omaha be cloned?
It’s the Woodstock of Capitalism, the investors’ Super Bowl, the Lollapalooza of lolly…
Tens of thousands of Berkshire Hathaway shareholders converged on Omaha, Nebraska, for the $300bn conglomerate’s annual meeting and the chance to hear in person from its legendary founder, Warren Buffett (and his droll sidekick Charlie Munger).
Stephen Foley, the FT’s US investment correspondent was there, too, to capture the wit, wisdom and sometimes wackiness on display. Read more
Sir Alex Ferguson’s retirement as manager of Manchester United gives the management world another example of how to bow out when you are, frankly, getting a bit elderly.
On this topic, we now have four great templates – the Pope, the Queen of England, Warren Buffett and Sir Alex – each of which could be applied by organisations whose leaders are grappling with questions about the frailty and mortality of their leaders. Read more
If you’re on Twitter, you’ll know by now that Warren Buffett is – to quote his first and (at time of writing) his only tweet – “in the house“.
His appearance on the social media service is apparently linked to a Fortune forum in which the Sage of Omaha is due to participate. It has already garnered him (again, at time of writing) 40,000 followers and prompted some Twitter wit from his bridge partner, Bill Gates. Read more
As head of the world’s largest advertising group by revenues, WPP’s Sir Martin Sorrell is used to talking about image. His own, which he assiduously promotes through the media, is about to take a battering.
Sorrell – "totally aligned"
ISS, the shareholder advisory firm, has recommended investors at its June 13 annual meeting should vote against WPP’s pay policies, according to which the chief executive will receive total pay and bonuses of £6.8m, up 60 per cent on the previous year.
Nothing new here, you might think. Investors holding more than a third of the stock voted against the remuneration report last year. Sir Martin, one of the longest-serving chief executives of a FTSE 100 company, shrugged that off and probably will again this time. Speaking before the ISS recommendation, he told the UK’s Sunday Times that his interests were “totally aligned with shareholders’. I am a big shareholder – 85 per cent of the package is performance related”. While his base salary had increased from £1m to £1.3m, he pointed out he had had “only one increase in 10 years”. Read more
Fred Wilson, the venture capitalist who is a mainstay of New York internet start-ups, has some provocative thoughts on the lifecycle of web and mobile apps – that their lifecycles are similar to those of hit television shows:
“This round trip from nothing to everything to nothing again is also true at some level with many tech companies. Digtal Equipment Corporation was founded in 1957 and shuttered in 1998. RIM was founded in 1984 and in all liklihood will be gone before the end of this decade. Same with Sun Microsystems, Silicon Graphics, and many more iconic tech companies.”
As he says, the networks effects that work in favour of social networks on the way up can also turn against them:
“Network effects are powerful in both directions. They can help you grow exponentially. But when they are going against you, they work just as fast. Myspace’s decline was mind-blowingly quick. RIM’s has been as well. Who is next?”
Warren Buffett’s early stage prostate cancer is so commonplace and treatable that you might legitimately ask whether it was worth declaring. But there is no question that it was better for Berkshire Hathaway’s chairman to make his statement than to conceal the condition.
While there are good reasons to respect the privacy of patients, Apple’s failure to detail Steve Jobs’ condition during his leave of absence for health reasons in 2009 spread unnecessary uncertainty about the future of the company and its succession planning.
If Mr Buffett had any doubts about whether to make his statement, he could have asked a fellow senior citizen: Rupert Murdoch. Read more
President Barack Obama’s proposed “Buffett rule” – that no household making over $1m annually should pay a smaller share of its income than middle-class families pay – may turn out to be good politics but it has a numerical weak spot.
The issue is that the top 0.1 per cent in the US are already paying a higher rate of tax on average than the middle quintile of earners, on the White House’s own figures – 26 per cent compared with 16 per cent in 2010. Read more
I hope activist Bill Ackman knows what he’s getting into by backing the purchase of a 29 per cent stake in Burger King.
Mr Ackman is one of the founders of Justice Holdings, a UK investment vehicle that until Tuesday was, to me at least, as little-known as Burger King is famous. But Justice’s decision to buy a minority stake and take the company on to the New York Stock Exchange reminded me how, a few years ago, a rumour that Warren Buffett had his eye on the chain turned out to be a whopper. Read more
I have met Debbie Bosanek. I’ve also met her boss Warren Buffett. But as far as this week’s US political news is concerned, the more important figure is Ms Bosanek, the billionaire investor’s secretary. She’s important because she’s met Barack Obama, who gave her a high-profile spot in the audience for his State of the Union address this week, transforming her into a symbol of tax inequality in America.
Mr Buffett started this, of course. In a New York Times op-ed last August he attacked a system that allows him to pay a lower tax rate than any of the other people in his Omaha office. This has spawned the “Buffett rule”, the benchmark that Barack Obama is using to promise that the richest Americans will not pay tax at a lower rate than their secretaries.
Ms Bosanek is both an obvious and an odd choice to become – as an ABC interviewer put it this week – “the poster woman” for this campaign. Obvious, because she is the gatekeeper for Mr Buffett. Odd, because she is far from a typical secretary (in her polite but terse emails, she actually styles herself, in the modern way, as “Assistant to Warren Buffett”). Read more
Warren Buffett’s foray into IBM, acquiring a 5.5 per cent stake in the company, seems to defy his longstanding antipathy to investing in technology companies. But it depends on what the meaning of “technology company” is.
Mr Buffett’s main objection to technology has always been its unpredictability, as he explained in this discussion with Bill Gates in 1998, which was published by Fortune magazine:
“I look for businesses in which I think I can predict what they’re going to look like in 10 or 15 or 20 years. That means businesses that will look more or less as they do today, except that they’ll be larger and doing more business internationally.”
“So I focus on an absence of change. When I look at the internet, for example, I try and figure out how an industry or a company can be hurt or changed by it, and then I avoid it. That doesn’t mean I don’t think there’s a lot of money to be made from that change, I just don’t think I’m the one to make a lot of money out of it.”
Warren Buffett in July 2011. Image by Getty.
Today’s story about Warren Buffett hiring the hedge fund manager who paid more than $5m to have two lunches with him in Omaha, Nebraska does nothing to diminish my questions about corporate governance at Berkshire Hathaway.
At any other company, the fact that Ted Weschler, the hedge fund manager in question, paid for access to the chief executive and was hired as a result would be unthinkable. Yet Mr Buffett and his partner Charlie Munger appear to run the top echelon of Berkshire more or less as they wish. Read more
For my latest column about the ideal age and tenure for a chief executive, GovernanceMetrics International pulled from its database of 4,268 companies worldwide a list of the 16 oldest sitting chief executives in the world. (They did 16 so that Warren Buffett – undoubtedly the most famous, and the youngest, of this bunch – would appear in the ranking).
In the article, I only had room to refer to Buffett and Cubic Corporation’s Walter Zable, 95-year-old doyen of the group. So here is the full ranking by age, with company name and links to official corporate biographies, where available: Read more
The annual shareholders’ meeting of Berkshire Hathaway in Omaha, Nebraska produced a modest mea culpa about how Mr Buffett had initially handled the David Sokol affair, but little sign that the company’s corporate governance or approach to leadership succession will change hugely.
Perhaps it is the wrong venue to expect something radical since, as Dan McCrum reports for the FT, most of the attendees were happy with Mr Buffett’s record as an investor and are not demanding significant changes.
Still, I find it disappointing that Berkshire’s board has so far given no indication of taking a clearer role in selecting Mr Buffett’s successor. He said in a CNBC interview that the board regularly discusses the issue, and that Mr Sokol was not the only (or even the leading) candidate:
“It is a subject that board spends a majority of its time on and people express themselves very vocally at board meetings on the pros and cons of various candidates.”
The first thing that strikes me in the scathing report of the Berkshire Hathaway audit committee on David Sokol, the senior executive who resigned last month, is that the thin defence of his conduct offered by Warren Buffett at the time has evaporated.
The second is that it makes Warren Buffett’s initial press release on Mr Sokol look distinctly economical with the truth. It will make for an interesting question and answer session at Berkshire’s annual shareholders’ meeting this weekend.
Here is my column at the time on the subject of Mr Sokol’s trading in Lubrizol shares before the company was acquired by Berkshire:
Mr Buffett provided a pre-emptive judgment on Mr Sokol’s behaviour last year in a memo to Berkshire’s managers and directors, including Mr Sokol. “If you see anything whose propriety or legality causes you to hesitate, give me a call,” he wrote. “If it’s questionable whether some action is close to the line, just assume it is outside and forget it.”
That is clearer than the mealy-mouthed half-defence of Mr Sokol offered by Mr Buffett in the statement announcing his departure. “Neither Dave nor I feel his Lubrizol purchases were in any way unlawful. He has told me that they were not a factor in his decision to resign.” Not unlawful? When Mr Buffett fails to mention ethics, something is up.
It bears repeating: top managers rarely leave Warren Buffett’s Berkshire Hathaway. Read more
The shareholders of Berkshire Hathaway were disappointed by Warren Buffett’s defence of Goldman Sachs at their annual meeting in Omaha, Nebraska this weekend, and I admit to being disappointed too.
Despite the doubts expressed by Charlie Munger, Mr Buffett’s business partner, about Goldman’s conduct in the synthetic CDO market, the Sage of Omaha threw his considerable weight behind the bank. Read more
The Oracle of Omaha has spoken and Lloyd Blankfein must be breathing a sigh of relief.
As I noted in my post below, a lot was riding on what Warren Buffett had to say about Goldman Sachs at the annual meeting of Berkshire Hathaway shareholders this weekend. As it turns out, Mr Buffett has come out strongly in Goldman’s defence. Read more
What will Warren Buffett say about Goldman Sachs? Read more
Back to Irene Rosenfeld, who despite her degree in psychology, appears to have upset an awful lot of people with Kraft’s £11.6bn takeover of Cadbury.
Having made herself unpopular in the UK by acquiring the maker of Cadbury’s Dairy Milk and the Curly Wurly, she has alienated Warren Buffett, her biggest shareholder, who regards it as “a bad deal”. Read more