Warren Buffet announced over the weekend in his annual letter to shareholders that his successor as chief executive officer of Berkshire Hathaway had been chosen — but he didn't say who. Then, in an interview with CNBC on Monday, he said that this person has not been told that he/she is the successor to the throne. The Oracle of Omaha always loves to keep a little mystery about his business.
Who is Warren Buffet? As my good friend Stephen Monk eloquently put it, "Warren Buffet is the man." It's true. I cannot emphasize this enough. Buffet is unlike any other investor. He invests on value, not imbalances or swings in the market. He sees his holdings as long-term, 10-, 20- or 30-year plays.
In addition to being the man, Buffet is also the chief executive of Berkshire Hathaway, a conglomerate holding company worth over $200 billion. Since Buffet took over the failing textile business in 1962, the company's book value has grown nearly 20 percent annually. Berkshire owns large stakes in a wide range of businesses, including American Express, Coca Cola and Wells Fargo. As Buffet said in his letter, "When you look at Berkshire, you are looking across corporate America."
The philosophizing, ukulele playing, model train enthusiast is 81, and despite "naming" his successor shows no signs of slowing down. Last year, Buffet made a brief cameo on "The Office" when the show was looking for a replacement for Steve Carell. Buffet played his frugal, value-seeking self: "When I make long-distance calls, will I be monitored or is it on the honor system?"
What makes Buffet so likable is his honesty and straightforward thinking. Buffet is not a "corporate raider" like Carl Icahn, nor do his philosophies take on the wordy prose of George Soros. Buffet focuses on the upside of a company and rarely shorts stocks. When Buffet announces that Berkshire has invested in a company, its stock often experiences a noticeable bump due to the market's faith in his judgment.
Buffet also readily admits when his investments have failed. After listing the profits Berkshire made this year, Buffet wrote, "I've run out of good news. Here are some developments that hurt us during 2011." Describing one particularly bad bond purchase, he said, "In tennis parlance, this was a major unforced error by your chairman."
Perhaps best of all, Buffet, whose net worth tops $50 billion, has given billions of dollars to charities. Buffet and Bill and Melinda Gates challenged the billionaires of the world in 2010 to donate half of their net worth to charity. His philanthropic pursuits have set a standard for those around him. Upon his death, Buffet is expected to donate 83 percent of his wealth to the Bill and Melinda Gates Foundation.
Despite his attempts to stay out of politics, Buffet has voiced his approval for the bailouts of the banking and automotive industries, affirming that they saved jobs and the economy as a whole. Buffet has also taken a stand on income equality, making news last year when he publicly stated that the top earning Americans weren't paying enough in taxes. President Obama agreed, and the "Buffet Rule" — which would ensure that Americans earning more than $1 million would not pay less than middle class earners as a proportion of income — quickly became a part of the tax plan vernacular.
Buffet has long been an investing establishment, but he continues to provide a refreshing change of pace. He still lives in his single family home in the suburbs of Omaha with his wife. He drives his own car, does not own a cell phone and has no computer. Other billionaires enjoy exotic cars and tropical getaways; Buffet likes to play bridge.
I dread the day when Buffet will hand over the reins. Until then, we should let him work his magic.
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Walt Laws-MacDonald is a freshman who has not yet declared a major. He can be reached at Walt.Laws_MacDonald@tufts.edu.
