'The architect of Berkshire Hathaway’: Warren Buffet pays tribute to Charlie Munger in letter to shareholders | Mint

24 Feb 2024

mint

Share on XTweet

This is Buffett's first such letter to Berkshire shareholders without his longtime investing partner, Munger, who died in November 2023 at the age of 99.

Warren Buffett credited his longtime partner — the late Charlie Munger — with being the architect of the Berkshire Hathaway in his annual letter to shareholders, after the conglomerate reported strong fourth-quarter earnings. Buffet also advised investors not to listen to Wall Street pundits or financial advisors who urge them to trade often.

This is Buffett's first such letter to Berkshire shareholders without his longtime investing partner, Munger, who died in November 2023, at the age of 99.

‘’Charlie, in 1965, promptly advised me: “Warren, forget about ever buying another company like Berkshire. But now that you control Berkshire, add to it wonderful businesses purchased at fair prices and give up buying fair businesses at wonderful prices. In other words, abandon everything you learned from your hero, Ben Graham. It works but only when practiced at small scale,'' said Buffet in his letter.

Also Read: Warren Buffett’s Berkshire Hathaway Trims Its Massive Stake in Apple

‘’With much back-sliding, I subsequently followed his instructions. Many years later, Charlie became my partner in running Berkshire and, repeatedly, jerked me back to sanity when my old habits surfaced. Until his death, he continued in this role and together we, along with those who early on invested with us, ended up far better off than Charlie and I had ever dreamed possible,'' added Buffet.

The investment mogul went on to add that in reality, Charlie was the “architect" of the present Berkshire, and he acted as the “general contractor" to carry out the day-by-day construction of his vision. Munger never sought to take credit for his role as creator but instead let Buffet take the bows and receive the accolades.

‘’In a way his relationship with me was part older brother, part loving father. Even when he knew he was right, he gave me there ins, and when I blundered he never –never –reminded me of my mistake,'' recounts Buffet.

‘’In the physical world, great buildings are linked to their architect while those who had poured the concrete or installed the windows are soon forgotten. Berkshire has become a great company. Though I have long been in charge of the construction crew; Charlie should forever be credited with being the architect,'' said Buffet.

Berkshire Hathaway Q4 Earnings

Buffet's Berkshire Hathaway posted its second straight record annual operating profit, with its insurance business benefiting from improved underwriting and higher income from investments as interest rates rose. The conglomerate's net income also reached a record $96.2 billion, as the rising stock market boosted the value of Berkshire's $354 billion equity portfolio, half of which is in Apple.

Buffett said Berkshire's insurance businesses performed "exceptionally well" -- among them, Geico, where better underwriting quality helped it more than reverse year-earlier losses. This helped offset declining fourth-quarter and full-year profit at the BNSF railroad.

Also Read: A $150 Billion Question: What Will Warren Buffett Do With All That Cash?

The operating profit rose 28 per cent to $8.48 billion, or about $5,884 per Class A share, in the fourth quarter, and 21 per cent to $37.4 billion for the year. The net income for the quarter more than doubled to $37.57 billion, or $26,043 per Class A share.

The $96.2 billion annual profit topped the old record $89.9 billion from 2021. Berkshire lost $22.8 billion in 2022, when the stock market fell. Buffett considers net results misleading because they include gains and losses on investments that Berkshire has not sold. In the absence of bigger deals, Buffett has also continued to lean on share repurchases, which he has said benefit shareholders. The firm spent $2.2 billion on buybacks in the fourth quarter, bringing the total for the year to about $9.2 billion.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!