Nov. 28 (Reuters) – Charlie Munger, a longtime friend of Warren Buffett, passed away on Tuesday at the age of 99. Investors expressed disbelief that Berkshire Hathaway’s (BRKa.N) hole would remain unfilled in spite of the company’s well-established succession plan.
Berkshire claims that Munger died peacefully in a Californian hospital where he was a patient. There was no explanation provided. On January 1st, Munger would have turned 100.
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Berkshire Hathaway’s chairman and CEO is 93-year-old Buffett. According to a press announcement, Buffett said, “Charlie’s inspiration, wisdom, and participation could not have been built to its present status.”
An era in corporate America and investment has come to an end with Munger’s passing. Munger has served as vice chairman of Berkshire since 1978.
Investors from all over the world revered and loved Munger along with Buffett, and many of them traveled to Berkshire’s annual shareholder weekends in Omaha, Nebraska, to hear the folksy wisdom on life and investment from the pair.
Buffett loses Munger as a sounding board after his death, even if he was not involved in Berkshire’s day-to-day operations.
Investors expressed their sadness over Munger’s passing, stating that although Berkshire has appointed leadership they believe they can trust to steer the company in the right direction, the loss would be felt deeply.
Thomas Russo, a longstanding Berkshire stockholder and partner at Gardner Russo & Quinn in Lancaster, Pennsylvania, described the news as “shocking.” “It will leave a big void for investors who have based their ideas, speech, and actions on Munger and his observations.”
Ever since assuming the role of vice chairman at Berkshire, Munger has collaborated closely with Buffett over the allocation of Berkshire’s capital, never holding back when he believed his business partner was making a mistake.
He was definitely one of the best investors, along with Buffett, according to Rick Meckler, a partner at Cherry Lane Investments in New Jersey.”I’m sure it is an enormous loss for Buffett personally.”
Munger was well known for having counseled Buffett to place a higher value on quality than what Buffett called “cigar butts”—mediocre companies with a simmering residue that could be bought for incredibly low prices.
Paul Lountzis, president of Lountzis Asset Management in Wyomissing, Pennsylvania, said of Charlie, “Charlie felt that buying very good businesses at fair prices that could keep compounding and reinvesting cash flow into sustained growth was more in line with the investment philosophies of both Warren and him.” “They liked to own businesses forever.”
An entire “generation of investment managers” gained some knowledge of their trade from Buffett and Munger, according to money manager Whitney Tilson, who was close to Munger.
The counsel these men gave on living a full life—namely, teaching others how to think clearly, be honest with themselves, and learn from mistakes—was what truly drew us in. mistakes and to avoid calamities,” he continued.
Speaking to a private audience, Munger jokingly joked, “All I want to know is where I’m going to die so that I never go there.” Tilson claimed to have attended dozens of the men’s sessions.
Munger is unlikely to be replaced by Berkshire, and the company has not made it known that it needs or wants to.
Ajit Jain and Greg Abel, two more vice chairmen, are in charge of managing Berkshire’s insurance and non-insurance operations on a daily basis.
Munger passed away exactly one week after Buffett acknowledged in a rare shareholder letter that he was nearing the end of his own illustrious investing career and gave approximately $866 million of Berkshire stock to four family organizations.
Buffett stated in the letter from last week that Berkshire was “built to last” and would continue to be run well in his absence.
He has never publicly expressed his desire to step down, even after receiving a prostate cancer diagnosis in 2012.”At 93, I feel good but fully realize I am playing in extra innings,” stated Buffett in a letter.
As to Berkshire’s succession plan, which Munger unintentionally brought up during the company’s 2021 annual meeting, Abel will take over as CEO when Buffett steps down.
One or two portfolio managers would take over investment management, and Buffett’s son Howard would become non-executive chairman.
The BNSF railroad, Geico auto insurance, a number of energy, industrial, and retail endeavors, as well as well-known brands like Fruit of the Loom, See’s Candies, Duracell, and Dairy Queen, are among Berkshire’s firms.
CHANGES WITHOUT CHARLIE
With tens of thousands of attendees each year and a global broadcast, Berkshire’s annual weekend will likely be the most obvious change to the public following Munger’s passing.
Munger will no longer be present to accompany Buffett on stage and respond to numerous inquiries from shareholders for a duration of five hours.
Perhaps a bigger part will be played by Abel and Jain, who have addressed some of those topics recently.
“The annual meeting will never be the same without Charlie’s terse, open and honest comments,” Lountzis stated.He was so different from Warren, in the sense that Charlie said what he thought and didn’t care what other people thought.