Charles Munger, Warren Buffett’s alter ego, sidekick and foil for nearly 60 years as he built Berkshire Hathaway from a bankrupt textile manufacturer into an empire, has died. He was 99 years old.
He died Tuesday at a California hospital, the company said in a statement. He lived in Los Angeles for many years. “We could not have built Berkshire Hathaway to where it is today without Charlie’s inspiration, wisdom and participation,” Buffett said in a statement.
Munger (rhymes with “hunger”), who trained as a lawyer, helped Buffett, who is seven years his junior, develop his philosophy of investing in companies for the long term. Under their management, Berkshire posted an average annual increase of 20.1% from his 1965 to his 2021. That’s nearly twice the pace of the S&P 500 index. Decades of compounding profits made them millionaires and folk heroes to enthusiastic investors.
Mr. Munger was Berkshire’s vice chairman and one of its largest shareholders, with a stock value of approximately US$2.1 billion as of March 2, 2022. Munger’s total net worth was approximately $2.5 billion as of early 2023.
At the company’s annual meeting in Omaha, Nebraska, where Mr. Munger and Mr. Buffett grew up, Mr. Munger was known for his role as a straight man in scolding corporate excesses. As Mr. Buffett’s fame and fortune grew (depending on Berkshire’s stock price, he could become the world’s richest man), so did Mr. Munger’s value as a reality checker.
“It’s great to have a partner who says, ‘You’re not right,'” Buffett said of Munger, who was sitting next to him, at Berkshire’s 2002 general meeting. (“That rarely happens,” Mr. Munger interjected.) Too many CEOs are surrounded by “a group of sycophants” who are unwilling to challenge their conclusions and biases, Buffett said. he added.
Mr. Munger said Mr. Buffett benefits from having a “talking foil who knows something.” I think it helped me a lot in that respect. ”
beyond value
Buffett credited Munger with broadening his investment approach beyond guru Benjamin Graham’s insistence on buying stocks at a fraction of the underlying value. With Munger’s help, he set out to build an insurance, railroad, manufacturing and consumer products conglomerate that posted operating profits of about $24 billion in 2019.
“Charlie has always emphasized, ‘Let’s buy really great companies,'” Buffett told the Omaha World-Herald in 1999.
That means companies with strong brands and pricing power. In 1972, Munger encouraged Buffett to buy See’s Candies, a California confectionery company. The success of that deal — Buffett came to regard Seeds as the “archetype of a dream business” — led to Berkshire’s $1 billion investment in Coca-Cola stock 15 years later. . .
The acerbic Munger so often dampened Buffett’s enthusiasm that Buffett jokingly called him a “disgusting incompetent.”
At Berkshire’s 2002 meeting, Buffett took three minutes to answer a question about whether the company would buy a cable company. Munger said he doubted it would be available at a price he was happy with.
“What price would you be happy with?” Buffett asked.
“Probably cheaper than you,” Munger parried.
cardboard cutouts
Mr. Munger frequently spoke by phone with Mr. Buffett, who was in Omaha from Los Angeles. Even if they couldn’t reach him, Buffett insisted he knew what Munger would think. When Munger was absent from Berkshire’s special shareholder meeting in 2010, Buffett imitated Munger by bringing a cardboard cutout of his partner on stage and saying, “I couldn’t agree more.”
Munger was an outspoken critic of corporate wrongdoing, calling the pay packages given to some chief executives “psychotic” and “immoral.” He called Bitcoin a “harmful poison,” defined cryptocurrencies in general as “part fraud, part delusion,” and warned that much of banking has become “gambling with drugs.” .
“I love his ability to ignore what he says and get to the heart of things,” said Cole Smead, CEO of Smead Capital Management, a longtime Berkshire investor. “In today’s society, that’s really unique.”
Although Munger was a supporter of the U.S. Republican Party and Buffett a supporter of the Democratic Party, the two men found common ground on issues such as the desirability of universal health care and the need for government oversight of the financial system. There were many.
But while Mr. Buffett travels the world encouraging billionaires to do philanthropy, Mr. Munger is more famous for private companies like Costco Wholesale (where he served on the board for more than 20 years). He said it contributes more to society than a charitable foundation.
Munger used his donations to promote abortion rights and education. He served as Chairman of the Board of Good Samaritan Hospital in Los Angeles. His bequest of millions of dollars to the University of Michigan and the University of California, Santa Barbara for new housing facilities gave him the opportunity to pursue his passion for architecture. But his vision to build a 4,500-person dormitory on the Santa Barbara campus drew howls of protest because, in 2021, most bedrooms would no longer have windows.
Wesco “Groupy”
Although he never rivaled Buffett in terms of global celebrity, Munger’s straight-talking style won him fans of his own.
He used the word “groupies” to refer to the fans who gathered, often in the hundreds, to watch him without Buffett. Munger, who hosted the annual meeting of Wesco Financial Corporation, a division of Berkshire, in Pasadena, Calif., spoke at length about his life and investment philosophies.
At the last meeting in 2011 before Berkshire took full control of Wesco, Munger told the audience, “You guys need a new cult hero.”
Charles Thomas Munger was born in Omaha on January 1, 1924, the first of three children of Alfred Munger and the former Florence Russell, known as Toody. His father, the son of a federal judge, earned a law degree from Harvard University before returning to Omaha, where his clients included the Omaha World-Herald newspaper.
Mr. Munger’s first contact with the Buffett family was through his Saturday job at Buffett & Son, an Omaha grocery store owned by Mr. Warren’s grandfather, Ernest Buffett. However, it was several years before the two future partners met.
Munger entered the University of Michigan at age 17 with the intention of studying mathematics. Mainly because it was so easy. “When I was younger, I could get an A in any math course without doing any work,” he said in a 2017 conversation at Michigan’s Ross School of Business.
Norm to Harvard University
In 1942, as a sophomore in college, he enlisted in the Army Air Corps and quickly became an Air Force. He was sent to the California Institute of Technology to study meteorology and then assigned to Nome, Alaska. During this period in his year 1945, he married his first wife Nancy Huggins.
According to Janet Lowe’s 2000 book Damn Right!, Munger applied to Harvard Law School before being discharged from the military in 1946 because he did not have a bachelor’s degree. He was only admitted to the school after the intervention of a family friend and former dean. Behind the scenes with Berkshire Hathaway billionaire Charlie Munger. Munger worked on the Harvard Law Review, graduating magna cum laude in 1948, one of 12 in his class of 335.
Munger moved to California with his wife and son, Teddy, and joined a law firm in Los Angeles. They added two daughters to their family before divorcing in 1953. In 1956, Munger married Nancy Barry Borthwick, a mother of two, and over time they expanded their blended family by having four more children. (Munger’s oldest child, Teddy, died of leukemia in 1955.)
Unsatisfied with the income potential of a career as a lawyer, Munger began working on construction projects and real estate transactions. He founded a new law firm, Munger, Tolles & Hills, and in 1962 formed Wheeler, Munger & Company, an investment partnership modeled after the one Buffett had formed with his early Omaha investors. .
“Like Warren, I had a strong passion to get rich,” Munger told Roger Loewenstein in “Buffett: How to Make an American Capitalist,” published in 1995. “It wasn’t because I wanted a Ferrari, it was because I wanted to be independent. I wanted it so badly. I didn’t think it was in decency to have to send the bill to someone else.”
1959 Introduction
His fateful encounter with Buffett occurred in 1959 during a visit to his hometown of Omaha. The exact location of their first meeting is the subject of legend, but it was clear that they hit it off right away. Soon, they were talking on the phone almost every day and investing in the same companies and securities.
Berkshire Hathaway’s investments began in 1962, when the company manufactured linings for men’s suits at a textile mill in Massachusetts. Buffett took control in 1965. Although the factory closed, Berkshire remained the corporate vehicle for Buffett’s growing conglomerate.
An important joint discovery was a company called Blue Chip Stamps, which operated a popular redemption game offered by grocery stores and other retailers. Because stores paid for stamps upfront and redeemed prizes much later, blue chips always piled up, just like in banks.
Using that pool of money, Mr. Buffett and Mr. Munger bought See’s Candies, the Buffalo Evening News, and a controlling stake in Wesco Financial, which Mr. Munger would lead.
In 1975, the U.S. Securities and Exchange Commission alleged that Blue Chip Stamp had manipulated Wesco’s price because Mr. Buffett and Mr. Munger had persuaded management to abandon the proposed merger. Blue Chip did not admit guilt and settled the dispute by agreeing to pay a total of approximately $115,000 to Wesco’s former investors.
The ordeal highlighted the risks of Mr. Buffett and Mr. Munger having such complex and overlapping financial interests. Years of efforts to simplify things culminated in 1983 with the merger of Blue Chip Stamp Co. into Berkshire. Munger, whose stake in Berkshire rose to 2%, became Buffett’s vice chairman.
Chinaable
In recent years, Munger’s fans have traveled to Los Angeles to ask questions at the annual meeting of the Daily Journal, the publisher he led as chairman. He demonstrated his investment acumen at the height of the 2008-2009 financial crisis, plowing the company’s money into temporarily underperforming stocks such as Wells Fargo.
Mr. Munger has long been more bullish than Mr. Buffett on investing in China. For example, Berkshire became the largest shareholder in Chinese automaker BYD a few years after Mr. Munger started buying shares in the company, but Berkshire began reducing its stake in 2022.
Mr. Munger shared the title of vice chairman at Berkshire in 2018 with Greg Abel and Ajit Jain, two next-generation senior executives named to the board in a long-awaited manifestation of Mr. Buffett’s succession plan. I started doing it.
Three years ago, it was Munger himself who was praising his boss for his unique style of backbiting and hinting at a possible promotion.
He wrote in 2015 that Mr. Abel and Mr. Jain were “better managers than Mr. Buffett in some important respects.”
