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Berkshire Hathaway CEO Warren Buffett made no mistake: He misses Charlie Munger, his long-time business partner and friend who died at the age of 99 in late November. In his first annual letter to shareholders since Munger’s death, Buffett recalled Munger as both Berkshire’s “architect” and a treasured partner. He also discussed his outlook for the company.
Talking about his first meeting with Munger in 1965, Buffett recounted how Munger told him, just three years after Munger entered the money management industry, that Buffett had made a mistake buying control of Berkshire but assured him , the move has been “He will tell me how to correct my mistakes.”
Buffett added that Munger did not invest any money in Berkshire at the time and “no one imagined that he would hold shares.” Still, Buffett said Munger advised him to forget about buying another company like Berkshire Hathaway, but since he did own the company, he should add “buy good businesses at fair prices and forego buying fair businesses.”
Furthermore, Munger asked him to “give up” everything he had learned from his hero Ben Graham. “It works, but only when practiced on a small scale.”
Buffett credits Munger with convincing him to “buy great companies at fair prices rather than average companies at fantastic prices” – Buffett calls the latter “cigar butts” because their businesses may still contain smoke.
The Berkshire Hathaway CEO also recalled Munger’s relative humility, saying Munger agreed to let him “take a bow and accept the accolades” while taking on more of an older brother or fatherly role.
“Charlie never sought to take credit for his role as a creator, but rather asked me to take a bow and accept the credit. In a way, his relationship with me was half brother, half loving father,” Buffett wrote. “Even though he knew he was right, he gave me control and when I made a mistake, he never — ever — reminded me of my mistake.”
Buffett said Munger “should always be considered the architect of the company.”
Munger’s death means Buffett will likely only share the stage with Vice Chairman Greg Abel (who will eventually become CEO) and Vice Chairman Ajit Jain at this year’s annual meeting on May 4.
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