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Five things we like about Warren Buffett

January 21st, 2013

The more we read about this man, the more we like him. This is not to say that he is perfect, or that he has not made mistakes; he has always been the first to admit that he has, and apologise to his shareholders. So here, in no particular order, are the five things we like best about the Sage of Omaha.

1. His approach to charities

The chief executives of big companies often give huge donations to charities and earn themselves big kudos for doing so. The kudos really belong to the shareholders who are the ones actually providing the money and who may, individually, approve or disapprove of the charities selected by management.

Warren Buffett does it differently. Berkshire Hathaway allows shareholders to nominate a particular charity that they want to see their share of the donation going to. This empowers shareholders while still helping out in areas of need. Warren Buffett does not need to feed his ego with the money of others.

(Update: this program has since been terminated. See our article on Buffett and charities for more details.)

2. He treats shareholders as true partners

Many company managers treat their shareholders with disdain and sometimes contempt, knowing that small shareholders do not really have any power to vote them out.

Read Warren’s letters to shareholders. He takes them into his confidence, communicates fully and, in easy to understand words, what the company has done and is doing, and gives them respect.

He also gives shareholders good value. He does not have a large support staff, and works hard.

For whatever they pay him – probably a lot less than paid to less successful CEO’s – he nonetheless does not like to waste company money. Sure, he did invest in a company plane, but if you read his letters to stockholders, he has been apologetic about it ever since. Compare this approach to others.

3. He does not take all the credit

Again, this is a hallmark of the man. At annual meetings, he deprecates his own role, gives full credit to his company managers, and is always taking his hat off to his long time partner Charlie Munger. And he consistently pays credit to his mentor Benjamin Graham.

How many CEO’s in Buffett’s position would be doing this?

4. He is known for his business sense and not his life-style

When one reads stories about Warren Buffett, they generally focus on his business acumen, investment philosophy and the way he has built up his wealth. We do not read about scandals, fast life styles or his ideas on the way other people should live their lives. And that is the way it should be. He does not court this type of publicity, either voluntarily, as others do for an ego-boost, or involuntarily though a life of self-indulgence.

5. His humor

We do not know if Warren’s homespun Will Rogers type humour and his Lincolnesque anecdotes are natural or derived and we do not care. He explains complex concepts and thoughts in a simple, understandable way with humor and relevance. That’s the way we prefer to be taught.

Posted by Julian Livy on January 21st, 2013 | Posted in Warren Buffett |