Warren Buffett Pays Tribute to Charlie Munger as Architect of Berkshire Hathaway in Annual Letter
In a heartfelt tribute, Warren Buffett, the renowned investor and CEO of Berkshire Hathaway, acknowledged the significant contributions of his longtime partner, Charlie Munger, in shaping the conglomerate. This was Buffett’s first annual letter to shareholders since Munger’s passing in late November. Munger, who became vice chairman of Berkshire Hathaway in 1978, had been instrumental in providing crucial advice to Buffett even before officially joining the company.
Buffett recounted a pivotal moment in 1965 when Munger advised him to shift his focus from acquiring fair businesses at wonderful prices to adding wonderful businesses at fair prices. He followed Munger’s guidance, and it proved to be a turning point for Berkshire Hathaway.
Once Munger joined the company, he continued to play a vital role in keeping Buffett grounded. Buffett acknowledged that Munger would often bring him back to reality whenever his old habits resurfaced. Together, they steered Berkshire Hathaway towards unprecedented success, surpassing their wildest dreams.
Munger’s influence extended beyond advising Buffett. He made key decisions that propelled Berkshire Hathaway’s growth. One notable example was his recommendation to invest in the Chinese automaker BYD. This investment, made in 2008, saw Berkshire Hathaway’s initial $230 million stake skyrocket to an impressive $9.5 billion after 14 years. Munger himself regarded this investment as one of the best moves he had ever made.
Known for his colorful language and candid remarks, Munger did not shy away from expressing his opinions on various topics. He famously referred to Bitcoin as “rat poison” and likened other cryptocurrencies to a type of “venereal disease.” In a Wall Street Journal article, he advocated for a complete ban on the entire cryptocurrency industry, describing it as a “gambling contract with a nearly 100% edge for the house.”
Buffett emphasized that Munger’s role at Berkshire Hathaway was far more significant than most outsiders realized. He described Munger as the “architect” of the present Berkshire Hathaway, with Buffett acting as the “general contractor” responsible for executing Munger’s vision. Munger never sought credit for his role but instead allowed Buffett to take the spotlight and receive accolades. Their relationship was akin to that of an older brother and a loving father, with Munger giving Buffett the freedom to lead while providing guidance and support.
Towards the end of the letter, Buffett expressed his frustration at the lack of attractive acquisition targets. He noted that the few U.S. companies capable of making a substantial impact on Berkshire Hathaway had been thoroughly examined by them and others. Despite this, Berkshire Hathaway’s cash reserves reached a record high of $167.6 billion in the fourth quarter.
Warren Buffett’s annual letter to shareholders serves as a poignant reminder of Charlie Munger’s immense contributions to Berkshire Hathaway. Munger’s wisdom, guidance, and decision-making prowess played a pivotal role in shaping the conglomerate’s success. As Buffett continues to navigate the investment landscape without his longtime partner, he pays tribute to Munger’s enduring legacy and the profound impact he had on Berkshire Hathaway’s journey.