Nov 28 (Portal) – Warren Buffett’s confidant Charlie Munger died on Tuesday at the age of 99, leaving a void at Berkshire Hathaway (BRKa.N) that investors said was impossible to fill despite the group’s well-established succession plan.
Berkshire said Munger died peacefully at a hospital in California, where he lived. No reason was given. Munger would have been 100 years old on January 1st.
“Berkshire Hathaway could not have been built to its current status without Charlie’s inspiration, wisdom and involvement,” Buffett, Berkshire’s 93-year-old chairman and CEO, said in a statement.
The death of Munger, Berkshire’s vice chairman since 1978, marks the end of an era of American business and investing.
Alongside Buffett, Munger was respected and revered by investors around the world, many of whom flocked to Berkshire’s annual shareholder weekends in Omaha, Nebraska, to hear the duo’s folksy wisdom about investing and life.
Although Munger was not involved in Berkshire’s day-to-day operations, Buffett’s death means he loses his long-time contact.
Investors also said that while Berkshire had appointed managers it could trust to keep the company afloat, Munger’s loss was deeply felt and caused great sadness.
“It’s a shock,” said Thomas Russo, a partner at Gardner Russo & Quinn in Lancaster, Pennsylvania, and a longtime Berkshire shareholder. “It will leave a huge void for investors who have aligned their thoughts, words and activities with Munger and his insights.”
PHILOSOPHICALLY SAME
Since his appointment as Berkshire’s vice chairman, Munger worked closely with Buffett to allocate Berkshire’s capital and did not mince his words when he believed his business partner was making a mistake.
“He was certainly one of the biggest investors on the team with Buffett,” said Rick Meckler, partner at Cherry Lane Investments in New Jersey. “I’m sure it’s a tremendous loss for Buffett personally.”
Munger was known for discouraging Buffett from buying what Buffett called “cigar butts” – mediocre companies that still had a puff of smoke left and could be bought at very cheap prices – and instead favored quality.
“Charlie felt that buying very good companies at fair prices that could continue to grow cash flow and reinvest into further growth was more consistent with his and Warren’s philosophy and was happy to invest,” said Paul Lountzis, president of Lountzis Asset Management in Wyomissing. Pennsylvania. “They liked owning businesses forever.”
Wealth manager Whitney Tilson, who knew Munger personally, said a “generation of investment managers” learned some of their craft from Munger and Buffett.
“What really captivated us about these men was their advice to live fulfilling lives by teaching people to think clearly, be honest with themselves, learn from mistakes and avoid disaster,” he said.
Tilson said he attended dozens of men’s meetings and Munger once quipped to a private audience, “I just want to know where I’m going to die so I never go there.”
[1/3]Berkshire Hathaway Inc. Vice Chairman Charles Munger speaks at the Daily Journal’s annual meeting on February 15, 2017 in Los Angeles, USA. Portal/Lucy Nicholson/File Photo Acquire License Rights
BERKSHIRE’S FUTURE
Berkshire is unlikely to replace Munger, and he has not publicly discussed the need or desire to do so.
Two other vice chairmen, Greg Abel and Ajit Jain, have day-to-day oversight of Berkshire’s non-insurance and insurance businesses, respectively.
Munger’s death comes a week after Buffett, at the end of his own investing career, donated about $866 million in Berkshire shares to four family charities and issued a rare letter to shareholders acknowledging that his own time was finite .
In last week’s letter, Buffett said Berkshire was “built to last” and would remain in good hands without him.
He has never publicly expressed his desire to resign, even after being diagnosed with prostate cancer in 2012.
“I feel good at 93, but I fully realize I’m playing in extra innings,” Buffett wrote.
According to Berkshire’s succession plan, which Munger accidentally mentioned at Berkshire’s 2021 annual meeting, Abel would become CEO once Buffett is no longer in charge.
Buffett’s son Howard would become non-executive chairman and one or two portfolio managers would handle the investments.
Berkshire’s companies include the BNSF railroad, auto insurer Geico and a number of energy, industrial and retail companies, as well as household consumer names such as Dairy Queen, Duracell, Fruit of the Loom and See’s Candies.
It also owns hundreds of billions of dollars worth of stocks, led by Apple (AAPL.O).
CHANGES WITHOUT CHARLIE
Perhaps the most noticeable change to the public after Munger’s death will be Berkshire’s annual weekend, which draws tens of thousands of people to Omaha and is livestreamed worldwide.
Munger will no longer be there to share the stage with Buffett and answer dozens of shareholder questions for five hours.
Abel and Jain, who have answered some of these questions in recent years, could play a larger role.
“Without Charlie’s concise, candid and honest comments, the annual meeting will never be the same,” Lountzis said. “He was so different from Warren in the sense that Charlie said what he thought and didn’t give a damn what anyone else thought.”
Russo added: “Without him, Berkshire might be a little less fun.”
Reporting by Jonathan Stempel in New York; additional reporting by Lewis Krauskopf Svea Herbst-Bayliss and Chibuike Oguh; Editing by Megan Davies, Rosalba O’Brien and Lisa Shumaker
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