Torstensson's Notes - Issue #10
It is simple but not easy
At 95 years old, Warren Buffett yesterday at Berkshire Hathaway's annual meeting announced that he will step down as CEO at the end of the year.
It will be some big shoes for CEO-elect Greg Abel to fill, as Warren Buffett is widely considered to be the greatest investor alive with Berkshire Hathaway's stock having gained 5,502,284% since 1964 (or 19.9 % per year).
Warren Buffett and his investment results are both inspiring and a testament to the need to adapt to the times while keeping one's core principles.
From running a hedge fund that invested in net-nets, special situations and deep value companies in the late 1950's and 1960's, Berkshire Hathaway itself was an unplanned acquisition after a failed buyout offer by the largest shareholder led to Buffett turning the tables and buying out most of the other shareholders.
After folding his hedge fund in the late 1960's and teaming up with the late Charlie Munger he changed investment style captured in his quote "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price".
Which lead to holdings in companies like Coca-Cola and American Express and many other leading firms.
His success, and status as one of the richest men in the world, led him to in 2006 pledge to give away 99 % of his wealth to charity and in 2010 to co-found the Giving Pledge where billionaires pledge to give away at least half of their wealth during their lifetime or in their wills.
Buffett's investment success and legendary letters to shareholders gave him a pristine brand among investors and businesspeople in general, which could be seen during the financial crisis in 2008 when getting an investment from Buffett would restore trust in any financial institution (and Berkshire Hathaway made sure to get paid for that).
There are plenty of books about Warren Buffett including the The Snowball: Warren Buffett and the Business of Life, Buffett: The Making of an American Capitalist and Berkshire Hathaway Letters to Shareholders (the letters can be found on berkshirehathaway.com).
Buffett is maybe the best example of what happens when capital is compounded at a high rate over a very long time. His stepping down as CEO will truly be the end of an era.