Munger Treats ‘Hard-Core Addicts’ as Wesco Stock Exits Market
Berkshire Hathaway Inc. (BRK/A)’s Charles Munger, who gained a following as a foil to his more famous business partner, Warren Buffett, is giving investors another chance to ask him questions after he scaled back his duties.
Munger, 87, will appear in Pasadena, California, tomorrow at a meeting called “A Morning with Charlie.” The conference was promised to investors as a replacement for Munger’s annual appointment hosting the shareholder meetings of Wesco Financial Corp., a Berkshire subsidiary that is no longer publicly traded.
“It’s only for hard-core addicts,” Munger, Berkshire’s vice chairman, said on April 30 at the company’s annual meeting in Omaha, Nebraska.
Munger won admirers for his blunt manner of speaking, which contrasts with the more affable delivery of Buffett, 80. At public events, Munger has praised China’s growth, chastised critics of U.S. bank bailouts and said Wall Street firms acted unethically in Greek public finance deals. At Berkshire, Buffett relies on Munger for his judgment when weighing new investments.
“He says exactly what’s on his mind,” Jeff Matthews, author of “Secrets in Plain Sight: Business and Investing Secrets of Warren Buffett,” said in an interview. “Who on earth would tell Warren Buffett, ‘That’s the stupidest idea you ever had?’”
The two Berkshire executives share a stage in front of tens of thousands of people at annual meetings, where Buffett conducts the proceedings and Munger periodically offers his views. The Wesco meetings, at which Buffett didn’t appear, drew hundreds of attendees.
Buffett met Munger in 1959, according to biographer Alice Schroeder. Together, the men planned the stock picks and purchases that built Omaha-based Berkshire into a $190 billion seller of insurance, energy and consumer goods. Munger’s influence helped transform Buffett, a picker of stocks in the 1950s and 1960s, into an investor who targeted successful companies with established brands, said Matthews.
“What Charlie brought to Warren was an appreciation of growth,” said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business. “Being willing to pay more than the rock bottom price that Warren was only willing to pay before.”
Munger assisted on deals like the 1972 purchase of See’s Candies, a California chocolate maker, and a 2008 investment in Chinese carmaker BYD Co. (1211)
The success of the See’s deal, according to Matthews, gave Buffett the inspiration to buy $1 billion of Coca-Cola Co. (KO) stock in the 1980s. That holding was worth more than $12 billion at the end of 2010. Berkshire is the biggest shareholder of Coca-Cola, the world’s largest soft-drink maker.
Munger is cutting back at Berkshire, where Buffett is chairman and chief executive officer. This month, Munger stepped down as Wesco’s chairman and CEO after closing a deal that allowed Berkshire to raise its ownership stake to 100 percent and remove the unit from the stock exchange.
Wesco, which has been controlled by Buffett since 1983, runs businesses ranging from insurance and furniture rental to steel storage. Munger remains president of the limited liability company that, under Berkshire, holds Wesco’s assets.
Munger told Berkshire shareholders at the 2010 annual meeting that civilization in China was advancing at a record pace that was “fun to watch.” At a University of Michigan event last year, he told an attendee who criticized bank bailouts, “You’ve got it exactly wrong.” At a press conference in Omaha in May, he said Wall Street bankers tried to “profit from sin” by selling derivatives that helped the Greek government conceal the size of its budget deficit.
While on stage, Buffett and Munger are often asked to weigh in on issues unrelated to Berkshire or business. One shareholder at the most recent Berkshire meeting asked for their opinions on teaching speed reading to children. Buffett said he wasn’t a fast reader and that the ability to get through texts quickly was a “huge advantage.” Munger then told a story about an old roommate and said that speed was overestimated.
“I wouldn’t be discouraged if you have to do it a little slower,” Munger said. “What the hell difference does it make?”
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