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Charlie Munger

Charlie Munger: 1924-2023

Berkshire Hathaway Inc. News Release

November 28, 2023 03:57 PM Eastern Standard Time

OMAHA, Neb.–(BUSINESS WIRE)–(BRK.A; BRK.B) – Berkshire Hathaway a few minutes ago was advised by members of Charlie Munger’s family that he peacefully died this morning at a California hospital.

Warren Buffett, CEO of Berkshire Hathaway, wishes to say: “Berkshire Hathaway could not have been built to its present status without Charlie’s inspiration, wisdom and participation.”

The family will handle all affairs pursuant to Charlie’s instructions.

About Berkshire

Berkshire Hathaway and its subsidiaries engage in diverse business activities including insurance and reinsurance, utilities and energy, freight rail transportation, manufacturing, retailing and services. Common stock of the company is listed on the New York Stock Exchange, trading symbols BRK.A and BRK.B.

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Charlie Munger Warren Buffett

Don’t Expect 5 Hours of Q&A at Berkshire Hathaway’s Virtual Annual Meeting

(BRK.A), (BRK.B)

Warren Buffett’s and Charlie Munger’s legendary five hours of Q&A at the Berkshire Hathaway annual meeting has come to an end. In fact, Munger will not even be taking questions at this year’s virtual event to be held on Saturday, having been replaced by Greg Abel, Berkshire’s Vice Chairman-Non-Insurance Operations.

Also the lengthy Q&A that in recent years has combined shareholder questions from the meeting floor, emailed questions, and questions from journalists, has been simplified and reduced.

In a statement, the company announced:

Warren Buffett, Berkshire’s CEO and Greg Abel, Berkshire’s Vice Chairman-Non-Insurance Operations will be physically present at the meeting. However, the other Berkshire directors will not be attending the meeting. In addition to the formal business to be conducted at the meeting, Mr. Buffett and Mr. Abel will respond to shareholder questions that were submitted to three journalists (Becky Quick, Carol Loomis and Andrew Ross Sorkin). Ms. Quick will ask those questions that the journalists decide are the most interesting and important. Mr. Buffett and Mr. Abel will have no prior knowledge of what questions will be asked, but they will not discuss politics or specific investment holdings.

The 2020 Annual Shareholders Meeting on Saturday May 2, 2020 will formally begin at 3:45 p.m. central time. As previously announced, we will not be able to allow shareholders to physically attend the meeting. However, the meeting will be streamed live on the Internet by Yahoo with a pre-meeting show beginning at 3:00 p.m. central time and can be accessed at https://finance.yahoo.com/brklivestream.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Charlie Munger Value Investing Warren Buffett

Value Investing: Overcome Your Fear, Don’t Be Doomed to Mediocre Returns

Part of an occasional series on Value Investing

Fear. It’s the one word that summarizes the emotion that grips investors when times are bad, really bad. Fear is the emotion that takes rational, prudent decision-making out of the investing process. It’s the whipsaw to the euphoria and overconfidence that comes when times are good, portfolios are fat, and almost every investment opportunity looks like a good one.

Warren Buffett famously said that his investment strategy was founded on seeing fear in the marketplace as a tremendous buying opportunity.

“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful,” Buffett wrote in his 1986 Letter to Shareholders.

Berkshire Hathaway’s vice chairman, and noted investor, Charlie Munger, has long expounded that periodic steep market declines are inevitable, and that unwillingness to withstand them is the road to poor performance.

In a 2009 interview with the BBC, Munger said:

“This is the third time that Warren (Buffett) and I have seen our holdings of Berkshire go down, top tick to bottom tick, by 50%. I think it’s in the nature of long-term shareholding, of the normal vicissitudes in worldly outcomes and markets that the long-term holder has his quoted value of his stock go down by say 50%. In fact you could argue that if you are not willing to react with equanimity to a market price decline of 50% 2-3 times a century, you are not fit to be a common shareholder and you deserve the mediocre result that you are going to get, compared to the people who do have the temperament who can be more philosophical about these market fluctuations.”

Diversification: Your Tool For Overcoming Fear

So, how can you overcome fear? It’s wired into us. It’s not intellectual, it’s emotional. It’s the flight part of fight-or-flight response. Overcoming fear is easier said than done, but here is a suggestion.

Trust the power of diversification. If you are buying index funds, such as S&P 500 index funds, know that the entire U.S. economy is not going away. It’s already survived the Great Depression, Great Recession, and a host of lesser known financial crises that run all the way back to the Credit Crisis of 1772. As, Charlie Munger pointed out, you have to expect that steep price declines will happen a number of times during your lifetime.

Warren Buffett has always believed in the power and resilience of the U.S. economy. He points out that in his own lifetime it has survived World War II and a host of other challenges, including over a decade of inflation in the 1970s and early-1980s, when mortgage rates peaked at over 18%, and has come back stronger.

“Anything can happen to stock prices tomorrow. Occasionally, there will be major drops in the market, perhaps of 50% magnitude or even greater,” Buffett said in an interview on CNBC in February. He urged investors, even small investors to see price declines for the opportunity that they are.

Remember it’s buy low and sell high, not the other way around.

The resiliency and long term strength of the U.S. economy, in other words the power of businesses as a whole to meet needs and solve problems, enabled the Dow Jones Industrial Average to not only survive a loss of 90%, but to rise from its Great Depression doldrums of a low of 41.22 to the record high 29,551.42 set on Feb. 12, 2020.

As shocking as a DJIA number in the 40s seems to us today, it’s not the Dow’s all-time low, which was 28.48 on August 8, 1896. Thus, you don’t need a century of lifespan to prosper investing in the stock market. An investor that prudently bought at 28.48 in 1896 was still up roughly 45% when the DJIA hit its depression era low.

Given enough time, the strength of the economy has proven time and time again the value of investing in equities.

“Most people are savers, they should want the market to go down. They should want to buy at a lower price,” Buffet notes.

So, get a hold of your fear and turn it into the courage to see the opportunity that is right in front of you.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Charlie Munger Commentary Warren Buffett

Commentary: Buffett and Munger Right on Cryptocurrencies, So Far

(BRK.A), (BRK.B)

It’s no secret that Warren Buffett and Charlie Munger have been famously down on cryptocurrencies.

“Bitcoin is like rat poison squared,” Buffett said during the 2018 Berkshire Hathaway annual meeting.

That Buffett, and Berkshire’s vice-chairman Charlie Munger, are naysayers on cryptocurrencies is no surprise. As the world’s leading value investors, speculative assets are exactly the things they avoid.

While Buffett’s “rat poison,” comment did not come with a detailed explanation, it was, however, supplemented by Munger’s take that cryptocurrencies are “totally asinine.”

On the speculative trading frenzy that bid prices up to astronomical levels at the end of 2017, that didn’t impress Munger much either.

“Someone else is trading turds and you decide I can’t be left out,” Munger noted wryly.

Since May, cryptocurrency prices have continued their downward march, including heavy selling on Monday and Tuesday.

Why? Perhaps it’s because the highly touted utility of Bitcoin, Ethereum, etc. have yet to prove compelling to anyone but speculators.

A Currency, or a Speculative Asset?

People that tout Bitcoin and other cryptocurrencies are really believers in the rise of a nonproductive asset that is no different than gold, silver, or the alligator infested swamp land offered during the Florida land speculation of the 1920s.

Cryptocurrencies are an asset that is moving up or down daily based on what Benjamin Graham would have called speculation, and what can also be called gambling.

Devotees will wax poetic about the unique properties of blockchain, the supposed anonymity of cryptocurrencies, and other virtues of virtual currencies that show its utility, but to do that is to ignore that these assets are not being bought and used as what they are touted as, currencies.

After all, a currency is supposed to be a medium of exchange between two parties for goods and services, not a speculative asset class that you stash in your safety deposit box on a thumb drive.

As for its unique utility, that also hasn’t impressed Munger all that much.

“The fact that it’s clever computer science doesn’t mean it should be widely used, and that respectable people should encourage other people to speculate on it,” Munger said on CNBC’s Squawk Box.

Put aside its so-called utility, let’s talk about why people really got excited about Bitcoin in the first place. It inflated in value at an astronomical rate, and people were becoming cryptocurrency millionaires or billionaires overnight without doing anything.

But wait, this extreme bidding upward in the marketplace is not a feature of currencies. It is a feature of speculative asset fevers reminiscent of the Dutch Tulip Mania of the 1500s.

While historically currencies have periodically plunged in value due to hyper-inflation (just look at Venezuela to see that phenomenon), the same process does not happen in reverse.

There’s a simple explanation for that. Plunging values for currencies reflect a lack of faith in a currency as a method of exchange. The more extreme that pessimism, the more currency it takes to overcome it.

But, currencies of the more sound variety, which in essence have more faith placed in them by creditors, do not get bouts of extreme faith that shoot them up astronomically. They increase or decrease in a much narrower range.

Accepting Bitcoin as a currency is no different than asking to get paid in casino chips or lottery tickets. You are hoping for a second transaction to determine its value. At the casino it’s spinning the roulette wheel, and with cryptocurrencies it’s betting in the marketplace that someone will pay you more for your Bitcoins than the valuation you got them at.

All speculative bubbles are full of enablers. They are so-called experts that tell you why this time is different, hucksters telling the masses not to be left out, and true believers that have adopted the asset as a religion.

It’s a familiar tale that always has a sad ending for all but a few.

“Bitcoin is worthless, artificial gold,” Munger noted on Squawk Box. “Now that is not something I think the world needs.”

So, far, both Buffett and Munger are being proven right.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Charlie Munger

Commentary: Remember Charlie Munger’s Advice Before Loosening Banking Regulations

(BRK.A), (BRK.B)

“I don’t think you can trust bankers to control themselves. They’re like heroin addicts,” Charlie Munger famously said.

At age 94, Berkshire Hathaway’s vice chairman has seen enough business cycles to know that when things go bad, banks fail.

Yet, now that the Great Recession is far enough in the rearview mirror you get the inevitable push to loosen the proprietary trading regulations and bank debt to equity financial requirements that were put in place to prevent the very excesses that brought on the most devastating financial crisis since the Great Depression of the 1930s.

Among the changes, thanks to bank and financial institution lobbying, U.S. regulators are proposing changes to the “Volker Rule” introduced after the 2007-2009 financial crisis that bans banks from trading on their own account in order to make compliance easier for many firms.

The 2010 Dodd-Frank financial reform law banned banks that held U.S. taxpayer-insured deposits from engaging in proprietary trading.

Former Federal Reserve chairman Paul Volker, whom the rule is named after, supports simplification, as long as the new rules meet the intent of the the current regulations.

“What is critical is that simplification not undermine the core principle at stake — that taxpayer-supported banking groups, of any size, not participate in proprietary trading at odds with the basic public and customers’ interests,” Volcker notes.

The proposed changes are now undergoing a 60 day public comment period.

President Trump has already signed into law changes in regulations impacting small and medium-sized lenders. Among the changes, the bill raised to $250 billion from $50 billion the threshold under which banks are deemed too big to fail, and eliminated the requirement for stress tests for the banks below that threshold as well.

Loosening some regulations may in fact bring some needed relief and improved efficiency for banks, but the fact that a number of democrats have signed on to this effort in addition to republicans says as much about the power of the banking lobby as it does about bipartisanship.

Berkshire Hathaway shareholders have a direct interest in the solvency of some of the largest financial institutions because Berkshire owns sizeable stakes in Wells Fargo, American Express, and Bank of America, not to mention Goldman Sachs.

While loosening of financial regulations may boost share prices and increase dividends in the short term, the question is whether it increases the likelihood of catastrophic financial institution failures in the future.

The Great Depression and the Great Recession are certainly the two most memorable periods of mass bank failures, but investors should keep in mind that there have been many more, including the Panic of 1819, the Panic of 1837, the Panic of 1873, and the Panic of 1907.

And don’t forget the Savings and Loan Crisis of the 1980s and 1990s, which saw 1,043 failures, accounting for roughly one third of all Savings and Loan associations.

Over the years, Charlie Munger has astutely noted that free market objectives are different than letting the fox have unfettered access to the henhouse, and he hasn’t been afraid to say so.

“People really thought that giving a predatory class of people the ability to do whatever they wanted was free-market enterprise, Munger wryly observed at the WESCO annual meeting in 2009. “It wasn’t. It was legalized armed robbery. And it was incredibly stupid.”

As for the push for tight regulations, “Banks will not rein themselves in voluntarily. You need adult supervision,” Munger wisely pointed out.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Charlie Munger Commentary Warren Buffett

Commentary: Warren Buffett is Right About Cryptocurrencies

(BRK.A), (BRK.B)

“Bitcoin is like rat poison squared,” Warren Buffett said during the 2018 Berkshire Hathaway annual meeting. The comment got a positive response from the tens of thousands that packed the CenturyLink Center’s arena.

That Buffett, and Berkshire’s vice-chairman Charlie Munger, are down on cryptocurrencies is no surprise. As the world’s leading value investors, speculative assets are exactly the things they avoid.

While the “rat poison,” comment did not come with a detailed explanation, it easily ties in with a major point that Buffett hammered home at the beginning of the meeting.

After showing the audience the front page of a newspaper from 1942, Buffett talked about the first three shares of stock that he ever bought when he was age 12, which was a company called Cities Service. He showed how his impatience and quickness to denied the far greater amount he would have made if he had been patient and held the shares long term.

Buffett again returned to the 1942 date to make a completely different point.

Buffett detailed what would have happened to an investment of $10,000 in gold on that date, as compared to $10,000 in what would have been an index of the S&P 500, if it had existed at that date. While 300 ounces of gold would have grown to a worth of $400,000 today, the shares of the S&P 500 stocks would have grown to a vastly greater sum of $51 million.

That’s the difference been a nonproductive asset and a productive asset, Buffett explained. Even after all the decades went by, the gold would still be only 300 ounces. It wouldn’t have grown. But the productive assets of the S&P 500 stocks have the capacity to grow because they represent businesses that produce goods and provide services.

“For every dollar you could have made in American business, you’d have less than a penny of gain by buying into a store of value which people tell you to run to every time you get scared by the headlines,” Buffett explained.

It’s all about nonproductive assets versus productive assets.

“While the businesses were reinvesting in more plants and new inventions came along, you would look into your safety deposit box, and you’ve have your 300 ounces of gold,” Buffett mused, “And you would look at it, and you could fondle it, I mean, whatever you wanted to do with it. But it didn’t produce anything. It was never going to produce anything. And what would you have today? You would have 300 ounces of gold just like you had in March of 1942, and it would be worth approximately $400,000.”

In the end, gold versus stocks, over a great length of time, is not even close.

“In other words, for every dollar you could have made in American business, you’d have less than a penny of gain by buying into a store of value which people tell you to run to every time you get scared by the headlines,” Buffett said.

While Buffett’s nonproductive asset versus productive asset lecture was using gold as the example, it could have just as easily been about Bitcoin and other cryptocurrencies.

Here’s where you get my commentary

People that tout Bitcoin and other cryptocurrencies are really believers in the rise of a nonproductive asset that is no different than gold, silver, or the alligator infested swamp land offered during the Florida land speculation of the 1920s. Cryptocurrencies are an asset that is moving up or down daily based on what Benjamin Graham would have called speculation, and what can also be called gambling.

Naysayers will talk about the unique properties of blockchain, supposed anonymity of cryptocurrencies, and other virtues of virtual currencies that show its utility, but to do that is to ignore that these assets are not being bought and used as currency, which after all is a medium of exchange between two parties.

Let’s pretend that a significant number of people were converting their dollars or euros, or other currencies into Bitcoin and then going out and buying houses, or cars, or diamonds with it. The last thing a recipient of a Bitcoin transaction would want to do is sell their house today and find that the value of the medium of exchange had dropped 5%, 10%, or more the day after their real estate transaction.

Let’s look at another key aspect of Bitcoin. It’s inflated in value at an astronomical rate. This is what has everyone so excited about it. You can become a cryptocurrency millionaire or billionaire overnight without doing anything.

This extreme bidding upward in the marketplace is not a feature of currencies. It is a feature of speculative fevers reminiscent of the Dutch Tulip Mania of the 1500s.

While historically currencies have periodically plunged in value due to hyper-inflation. We need just look at Weimar Republic Germany, 1980s Argentina, or Venezuela today to see that phenomenon, the same process does not happen in reverse.

There’s a simple explanation for that. Plunging values for currencies reflect a lack of faith in a currency as a method of exchange. The more extreme that pessimism, the more currency it takes to overcome it.

But, currencies of the more sound variety, which in essence have more faith placed in them by creditors, do not get bouts of extreme faith that shoot them up astronomically. They increase or decrease in a much narrower range.

Accepting Bitcoin as a currency is no different than asking to get paid in casino chips or lottery tickets. You are hoping for a second transaction to determine its value. At the casino it’s spinning the roulette wheel, and with cryptocurrencies it is betting that in the marketplace someone will pay you more for your Bitcoins than the valuation you got them at.

All speculative bubbles are full of enablers. They are so-called experts that tell you why this time is different, hucksters telling the masses not to be left out, and true believers that have adopted the asset as a religion.

It’s best to remember that speculative fevers are not just a remnant of the distant past. In the late-1990s, a plush toy called a Beanie Baby became the focal point of a speculative fever. Suddenly, an asset that’s main utility was as an occupant of a child’s toy box, was being hoarded by everyone and their brother. Prices soared, certain $5 Beanie Babies were going for $5,000, and one obsessed man planned to pay his children’s college education based on the anticipated rise in value of his plush portfolio. The strategy did not work out well.

As for Bitcoin, while players such as Goldman Sachs are actively looking to make money off of people trading cryptocurrencies, Warren Buffet rightly expressed his skepticism that such a move represented any kind of endorsement of the soundness of the strategy.

“I would be very surprised if the top partners of Goldman are selling their Goldman stock and putting it into Bitcoin,” Buffett said on CNBC’s Squawk Box.

It’s a familiar tale that always has a sad ending for all but a few. Just ask the man who lost $100,000 hoarding Beanie Babies.

Buffett’s rat poison comment is true. However, rat poison kills rats. Speculative fevers kill the hopes, dreams, and lives of investors.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Charlie Munger Minority Stock Positions Stock Portfolio Warren Buffett

Commentary: Buffett Unlikely to Abandon BYD

(BRK.A), (BRK.B)

With Chinese new energy company BYD seeing a major slump in its share price, its important to remember that Warren Buffett’s belief in the company’s founder and CEO Wang Chuanfu makes it more likely that Buffett will buy more shares, or at least maintain Berkshire’s current position than abandon the investment.

BYD’s share price peaked at 83.70HKD in October 2017 and as of May 2 has slumped to 54.00HKD.

Berkshire’s still way ahead, as its cost basis per share was 8.00 HKD. Berkshire took its position in 2008 when it purchased 225 million shares at roughly 8.00KHD.

Whose idea was it to purchase a stake in the company? It wasn’t Buffett’s, but he has since become a big fan.

“Charlie (Munger) called me one day and says, ‘We’ve got to buy BYD. This guy that runs it is better than Thomas Edison,’ Warren Buffett explained while appearing on CNBC’s Squawk Box on Feb 26, 2018. “And I said, ‘That isn’t good enough.’ And then he called a little later and said, ‘He’s a combination of Edison and Bill Gates.’ And I said, ‘Well, you’re warming up but it still isn’t good enough.’ Anyway, Charlie wanted to do it. Now, it’s worked out so well that I’m actually starting to remember that it was my idea. As it’s coming back to me. I think I persuaded Charlie. But unfortunately I’m on the record that it’s his deal. But BYD, Charlie’s in love with the company, and it’s done very well. And the fellow that runs it, you know who’s autos and batteries, but he’s got big, big ideas and he’s very good at executing. So, but I leave it to Charlie.”

Stock prices go up and down, but Buffett has always been the most patient of investors.

With BYD having sold 13,000 of its plug-in electric cars in March alone, and aiming to sell between 15,000 and 20,000 cars per month when its new model year debuts, it continues to be the leader in EV cars.

The sales marked an increase of 116% year-over-year and were 31% of the total BYD car sales for the month.

BYD was number one worldwide in plug-in electric vehicle sales in 2017, its third consecutive year.

Additionally, its dominance in the Pure electric bus market continues to grow. The company sold over 14,000 pure electric buses globally in 2017.

It’s unlikely that Buffett’s or Munger’s respect for the company will change due to short-term price fluctuations and investors should be reminded that BYD’s stock price had a similar plunge in 2014 that saw no selling by Berkshire.

I’m not calling this one of Buffett’s forever stocks, but it would seem to fit one of his classic buy-and-hold investments, and it is unlikely to leave Berkshire’s portfolio anytime soon.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Charlie Munger Minority Stock Positions Stock Portfolio Warren Buffett

Warren Buffett on a stock buy so good, “that I’m actually starting to remember that it was my idea.”

(BRK.A), (BRK.B)

Berkshire Hathaway’s investment in Chinese new energy company BYD has worked out so well that it’s now among the company’s top fifteen stock holdings.

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares. It’s an investment that has grown almost ten-fold in just a decade.

Berkshire’s original investment of $230 million is now worth roughly $1.96 billion.

Whose idea was it to purchase a stake in the company?

“Charlie (Munger) called me one day and says, ‘We’ve got to buy BYD. This guy that runs it is better than Thomas Edison,’ Warren Buffett explained while appearing on CNBC’s Squawk Box. “And I said, ‘That isn’t good enough.’ And then he called a little later and said, ‘He’s a combination of Edison and Bill Gates.’ And I said, ‘Well, you’re warming up but it still isn’t good enough.’ Anyway, Charlie wanted to do it. Now, it’s worked out so well that I’m actually starting to remember that it was my idea. As it’s coming back to me. I think I persuaded Charlie. But unfortunately I’m on the record that it’s his deal. But BYD, Charlie’s in love with the company, and it’s done very well. And the fellow that runs it, you know who’s autos and batteries, but he’s got big, big ideas and he’s very good at executing. So, but I leave it to Charlie.”

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Acquisitions Buffett Successors Charlie Munger Warren Buffett

Major Changes Coming With Abel’s and Jain’s New Roles as Vice Chairmen

(BRK.A), (BRK.B)

With Gregory Abel elevated to Berkshire Hathaway’s Vice Chairman – Non-Insurance Business Operations, and Ajit Jain appointed Vice Chairman – Insurance Operations, Warren Buffett has made clear that major changes are in store in the command structure of Berkshire’s operations.

While Buffett has no interest in stepping down as chairman, he is shifting the responsibility for both the bolt-on acquisitions and the setting of salaries and compensation for Berkshire’s managers to his new vice chairmen.

“They’ll decide the compensation of the people underneath,” Buffett explained in a January 10 interview on CNBC. “I mean, certain people we have compensation arrangements with that we will have in force for their lifetime because we made up at the time of acquisition, but aside from the ones that are fixed, those decisions will be theirs. And smaller bolt on acquisitions will probably be theirs if there’s a large bolt on acquisition, then Charlie and I will get involved.”

Berkshire shareholders apparently should have no fear that Buffett’s famed “elephant gun,” the term he uses for hunting for giant-sized acquisitions, will be silenced any time soon.

2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Buffett Successors Charlie Munger Warren Buffett

Only One CEO in Berkshire’s Future Says Warren Buffett

(BRK.A), (BRK.B)

With both Greg Abel and Ajit Jain recently promoted to the positions of vice chairman, the obvious question is will they one day be co-CEOs of Berkshire.

“No” say’s Warren Buffett, who in a January 10 interview on CNBC made it clear that there will only be one CEO.

“When I’m not CEO, there will be another CEO, Buffett explained. “There will be a CEO. And how that CEO will organize things will be up to him in this case. And he will figure out the best way to do it. And it won’t change very much. It will change a little, but it won’t change very much.”

So, will the CEO be Abel or Jain? From Buffett’s remarks it seems clear it will be Abel.

“There’s no horse race at all in these two fellows,” Buffett noted in answer to a question of whether the two are jockeying for position. “They know each other well. They like each other well. They both have their areas of specialty. I mean, Greg would not want to be running insurance and Ajit would not be running the other operations.They are extremely good at what they do. Those are two pretty different businesses. And they’re roughly equal businesses. There are more people on one side, but the insurance business generates over $100 billion of float in addition to having well over $100 billion invested in it in terms of net worth. So, there’s more or less parity of earning power and importance.”

Since according to Buffett “Ajit would not be running the other operations,” and Buffett has expanded Abel’s purview to all of Berkshire’s non-insurance businesses (a new CEO has been appointed to head Berkshire Hathaway Energy), everything points to Abel, 55, being the heir apparent for CEO.

As for other potential CEOs, Mathew Rose, executive chairman of BNSF Railway, no longer seems to be a candidate to take over the helm of Berkshire. Nor does Mark Donegan, CEO of Precision Castparts. The two executives lead two of Berkshire’s largest companies.

Buffett also revealed that Charlie Munger, who already had the title of vice chairman, would not be getting a new title, and was completely on board with sharing the title.

“It was his idea, actually, in terms of the title,” Buffett said. “I got about halfway through the first sentence, which is more than i usually get through with Charlie before he comes up with a better idea, and he just says, let’s just have three vice chairmen.”

2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.