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On Warren Buffett's relationship with Charlie Munger

·13 min read
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As most of us can attest, a deep business friendship is a rare thing, or even an oxymoron. And yet how else to describe the relationship between Warren Buffett and Charlie Munger? This year’s Berkshire Hathaway (BRK-A, BRK-B) annual meeting is nothing less than a testament to that. Let me explain.

For the second year in a row, the Berkshire meeting will be a one-off. As in 2020, there will be no shareholders present and none of the usual accompanying hoopla and glorification of all things Berkshire and Buffett & Munger. In previous years, for decades in fact, tens of thousands of attendees have streamed into Omaha, Nebraska the first Saturday in May. Not last year though.

That meeting was held where it had been for a number of years prior, the CHI Health Center in downtown Omaha, only the facility was cavernously vacant. Because of COVID-19 not a single shareholder was allowed in. Buffett was there of course, pontificating, (like never before really), and answering questions remotely from shareholders and analysts.

But something else was missing besides the audience last year. There was no Charlie Munger. Buffett’s buddy, his sidekick, his counterpart. The Yin to Warren Buffett’s Yang. His right hand and friend of 62 years had to stay home in LA for health and safety reasons.

That didn’t sit well with Buffett.

And so as it became clear that Berkshire again would be unable to host the usual crowd of 40,000 in Omaha, and that traveling would still put Munger at risk, Buffett, a grandmaster at thinking different, began to do just that.

I got my first inkling that something was afoot late last fall when I spoke to folks at Berkshire who told me they were thinking of a Plan B for the 2021 annual meeting. Mysterious, I thought.

And then a month or so later, the plan was revealed.

The idea was simple: Essentially, if Charlie Munger couldn’t come to the annual meeting, Buffett would bring the annual meeting to Charlie. And so that’s how the 2021 Berkshire Hathaway annual meeting came to be convened in an office tower in Los Angeles. Which means that Charlie Munger, 97, and Warren Buffett, 90, the greatest buddy act in the history of American business, will be reunited.

Berkshire Hathaway Chairman and CEO Warren Buffett, left, and Vice Chairman Charlie Munger, briefly chat with reporters Friday, May 3, 2019, one day before Berkshire Hathaway's annual shareholders meeting. An estimated 40,000 people are expected in town for the event, where Buffett and Munger preside over the meeting and spend hours answering questions. (AP Photo/Nati Harnik)
Berkshire Hathaway Chairman and CEO Warren Buffett, left, and Vice Chairman Charlie Munger, briefly chat with reporters Friday, May 3, 2019. (AP Photo/Nati Harnik)

Like millions of Americans who’ve been kept apart by COVID, Buffett and Munger haven’t seen each other in person in quite some time. OK, you might be thinking, same for me and my 78-year-old aunt Gertrude. I hear you. And yes millions of us have had to endure painful separations. But there is something especially poignant about two nonagenarians who care about one another deeply, coming together again. Sounds like an old married couple, right? Maybe even better. “We’ve never had an argument,” Buffett likes to say.

I spoke with Buffett earlier this month, mostly about logistics for the livestream, but at a certain point Buffett began unprompted to wax on about Charlie and how much they like each other, and how people love listening to Charlie and how happy he would be to be back on stage with Charlie swapping stories and how the two of them feed off each other, and that a good number of directors would be coming to LA mostly to see Charlie and how Charlie, who has had some serious health issues, never complains and how long they’ve been together, and well, just how remarkable Charlie is.

How many co-workers can you say that about? Or say that about you?

So I think the biggest highlight of the meeting will be right at the open, seeing Charlie and Warren, vaccinated, reunited and feeling so good.

The New York Times wonders if Buffett and Munger are getting a bit out of touch, citing some shareholder proposals, one on establishing climate change goals and another doing the same for diversity at the company, both of which Buffett has recommended rejecting. While saying he supports those ideals, Buffett has previously responded that Berkshire, as a conglomerate, is too disparate to be subjected to universal edicts, saying in 2018, “I don’t believe in imposing my political opinions on the activities of our businesses.” One does wonder if that still flies in 2021.

It will be interesting indeed to see how the Berkshire community votes on these initiatives, a group by the way, which is rife with longevity. Coincidence? Or is it because so many Berkshirites, like Buffett (and Munger to a degree) are even-keeled folks who are drawn to like-minded individuals — or perhaps because it is learned behavior after studying the ways of Buffett? I would argue for the latter (and against the coincidence.)

Shareholder Jessica Staben takes a selfie with one-year-old Cecilia Johnson in front of a caricature of Berkshire Hathaway Chairman and CEO Warren Buffett, right, and his Vice-Chairman Charlie Munger, on the exhibit floor at the CenturyLink Center in Omaha, Neb., Friday, May 4, 2018, where Berkshire brands display their products and services. On Saturday, shareholders are expected to fill the CenturyLink arena as they attend the annual Berkshire Hathaway shareholders meeting where Buffett and his Vice Chairman Charlie Munger preside over a Q&A session. (AP Photo/Nati Harnik)
Shareholder Jessica Staben takes a selfie with one-year-old Cecilia Johnson in front of a caricature of Berkshire Hathaway Chairman and CEO Warren Buffett, right, and his Vice-Chairman Charlie Munger, on the exhibit floor at the CenturyLink Center in Omaha, Neb., Friday, May 4, 2018, where Berkshire brands display their products and services. On Saturday, shareholders are expected to fill the CenturyLink arena as they attend the annual Berkshire Hathaway shareholders meeting where Buffett and his Vice Chairman Charlie Munger preside over a Q&A session. (AP Photo/Nati Harnik)

All those old-timers, along with the rest of us, will have to soak up that knowledge from afar this year. Like Dr. Stanley Truhlsen, 100, of Omaha who first met Buffett at a dinner with a group of other doctors in 1960, invested and made millions. Or my former longstanding Fortune colleague, legendary journalist Carol Loomis, 91, (she edits Buffett’s shareholder letter) who’ll be watching today from suburban New York City.

“I haven't missed the annual meeting for years now,” says Loomis. “It's a great convivial event in which people who have learned to know each other over the years reconvene. You have two of the smartest guys in the world sitting up there ready to answer any question you ask. And the great thing that's going to be happening this year is that Charlie Munger is back. To have either one of them would be great, but to have both is even greater.”

Carol appeared this past week at a webinar organized by George Washington University law professor Lawrence Cunningham, and attended by fellow Buffettites Tom Gayner, co-CEO of Markel Corp as well as writer and investor Robert Hagstrom, (hosted by yours truly).

One highlight was Carol telling us how she met Buffett, more than 50 years ago:

“I think we're talking about 1967. My late husband John worked on Wall Street as a salesman, covering institutional accounts. And he ran across a small item in Businessweek about this man, Warren Buffett, whom he never heard of, in Omaha. He wrote Warren a letter and said he was going to be in Omaha the next Monday, and could he drop in and see Warren. It always amazed me that Warren saw him because Warren didn't talk much to securities salesmen, but he did. And they liked each other. And Warren said, ‘let's go over to the hotel and have lunch.’”

Carol also told me, “John Loomis came home from Omaha saying, ‘I think I just met the smartest investor in the country’—and I no doubt thought that was one of those exaggerations that husbands fall into. But then a short time later we were asked to have lunch with Warren and [his first late wife] Susie [in New York], and I quickly realized this guy really must be the smartest investor in the country."

“I'm sure Warren was interested in the fact that I wrote for Fortune,” says Carol. “He has said that if he hadn't been an investor, he might have become a journalist. He has always had a great, great interest in journalism. So that is how we met and we became friends. And then in time, Warren asked me if I would take on the editing of his [shareholder's] letter. So it was a long, long history.”

Tom Gayner, who says he learned of Buffett from reading one of Loomis’s articles, spoke of running a business that has Berkshire-like aspirations.

“We do indeed try very hard,” he says. “I'll share one story that goes back probably 15 or 20 years. There was an analyst who came through Richmond to visit Markel and listened to our story about what we were trying to do and trying to accomplish. And we do have a playbook and we have tried to learn from somebody who's been the best at it. At the end of his visit, he said, ‘you know, the trouble with you guys, is you're trying to be just like Berkshire Hathaway.’ To which, which I responded, ‘who would you rather us be like?’ I thought it was ridiculous, but that's a true story."

“People ask, ‘why don't more people try to run their companies like Berkshire?’" Gayner asks. “It’s a logical question that defies a simple answer. One of which is Buffett and Munger are geniuses, so don't underestimate the raw horsepower and the cultivated intellect that they bring to the task at hand. So it's much easier to say than to do. But secondly, and I think this matters in today's world, there's a degree of personal responsibility that they have assumed in their management of Berkshire and their leadership. They're managing money on behalf of other people. And when you do that, and you do it without skill or perhaps chinks in your confidence, sometimes that burden of responsibility can seem very high. And it can dissuade people from taking the singular type of responsibility that they've been willing to accept. I just think people are very uncomfortable with this. In the investment arena, at any given point in time, you either look smarter or dumber than you really are. And people just can't stand that period of time when you look dumber than you really are.”

Heaven knows people try to emulate and understand Buffett. I’m told by Larry Cunningham that there are now some 330 books on Warren Buffett, a few of which (Buffett has designated 20 to be sold at the annual meeting) like Loomis’s “Tap Dancing to Work,” and some of Cunningham’s that are a cut above the rest. Also very much in that class is Robert Hagstrom’s “The Warren Buffett Way: Investment Strategies of the World’s Greatest Investor” which has sold more than a million copies and been translated into 18 languages, (not by Robert personally, to be clear.) Now Hagstrom has a new book titled “Warren Buffett: Inside the Ultimate Money Mind.”

“I think what is probably one of the most important parts of Warren being a successful investor is about temperament,” says Hagstrom. “It was at the 2017 annual meeting where he had this term that I had never heard before called ‘the money mind.” He began to explain that the next person who sits in the CEO chair at Berkshire Hathaway must possess this. And it was at that moment sitting in the annual meeting that I said to myself, ‘you know, you've spent the last 25 years working on methods and mechanics, how Warren Buffett invests, you really have discounted, what I came to believe was the most important part, which is temperament.’"

Cunningham adds to this point: “The Berkshire magic is that a trust-based culture actually delivers better performance than a control-based culture,” he says. “It's contrary to conventional thinking and practice in corporate America. And that filters out into every other aspect of the business to include the shareholder relationship, the way the board operates. And, and even this meeting.”

TODAY -- Pictured: (l-r) Carol Loomis and Warren Buffett appear on NBC News'
TODAY -- Pictured: (l-r) Carol Loomis and Warren Buffett appear on NBC News' "Today" show -- (Photo by: Peter Kramer/NBC/NBC Newswire/NBCUniversal via Getty Images)

Speaking of the meeting, let me give you a brief walk-up. First a note about traveling to LA since my journey 12 months ago can only be described as epic.

A year ago I flew to Omaha through nearly empty airports and in airplanes devoid of humans. Not this time. Newark Airport, the plane and LAX were all filled with people. It was just like old times, only now everyone is wearing a mask and no one can understand each other, including the TSA personnel, which seems even more understaffed and stressed than before. If and when you go back to the airport, people, I urge patience.

You have to remain masked on the flight of course and they serve food but according to the flight attendant, “You can remove your mask to eat or drink but you must replace the mask between bites” (and here he paused for some reason) and sips. Then he added: “Please relax and enjoy the flight.” Um, sure.

As for the LA office tower where today’s meeting will be held, it was a beehive of activity yesterday. There was setting up camera angles of Buffett, Munger, and vice chairmen Ajit Jain and Greg Abel with production crew as stand-ins, who got a kick out of that. CFO Marc Hamburg was cranking away on a million last minute details. And the requisite boxes of See’s peanut brittle were placed next to the stage for munching by Buffett and perhaps others. By the end of the day, all systems were go.

What to expect tomorrow? Buffett suggested to me that he wouldn’t be giving a long monologue this year as he did last year when he spoke for over 90 minutes straight.

Again though to me the main event will be the Charlie and Warren reunion, and listening to their quips, wisecracks and 187 years of collective wisdom.

“It's gonna be wonderful to see it this week as we get together once again,” says Carol Loomis. “But I relish the chance to get back to a real one.”

Ah yes, real life. In the same way all of us are looking for a return to normalcy this summer, this tribe wants a return to Omaha in 2022. Is it too much to hope for? Charlie will be 98 of course and Warren, (who tells me that Charlie takes away his ability to play the age card), will be a year older too. And so will Carol Loomis and Dr. Truhlsen and the others, too.

It’s not worth dwelling on that point though. Buffett doesn’t. He points out with his trademark chuckle that people have been asking him about succession plans going back to the 1980s and that those same people are now themselves all retired or have passed on.

Yes Buffett, Munger and the Berkshire board have plans for the company after this most dynamic of duos isn’t running the show, but for now enjoy the Warren and Charlie moment, every word and every second of it. After that, it’s on to Omaha!

This article was featured in a Saturday edition of the Morning Brief on May 1, 2021. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Andy Serwer is editor-in-chief of Yahoo Finance. Follow him on Twitter: @serwer

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