Warren Buffett’s annual shareholder letter this year carried a special section dedicated to his long-time business partner, Charlie Munger, who passed away in November at the age of 99. In the letter, Buffett made it clear that Munger played a pivotal role in shaping the success of Berkshire Hathaway, the conglomerate that now boasts a valuation of over $900 billion. Describing Munger as the “architect” behind present-day Berkshire, Buffett acknowledged his own role as the “general contractor” who executed Munger’s vision on a day-to-day basis.
Analysts and investors took note of Buffett’s tribute to Munger, with Edward Jones analyst Jim Shanahan describing it as a “profound compliment” coming from one of the most respected investors in the world. Shanahan emphasized the significant influence that Munger had on both Berkshire’s success and Buffett’s personal achievements. According to Shanahan, Munger’s wisdom and guidance were instrumental in shaping Buffett’s investment philosophy and decision-making process.
An Unbreakable Bond
Buffett and Munger’s partnership spanned more than six decades, with Munger serving as Berkshire’s vice chairman for 45 years. The two men, who grew up in Omaha around the same time, first crossed paths in 1959. Under their leadership, Berkshire diversified its holdings to include well-known businesses such as Geico insurance and the BNSF railroad, in addition to a substantial portfolio of stocks anchored by Apple. Munger’s sharp wit and insightful maxims became legendary in investment circles, embodying his distinctive approach to business and life.
One of Munger’s most enduring contributions to Buffett’s investment philosophy was the shift towards favoring quality companies at reasonable prices over undervalued but mediocre companies. This shift, symbolized by Munger’s famous quote, helped Buffett refine his approach to investing and ultimately achieve unparalleled success in the market. By focusing on businesses with long-term value and solid fundamentals, Buffett was able to move away from the “cigar butt” strategy of searching for bargains in distressed companies.
A Lasting Legacy
Buffett’s heartfelt tribute to Munger in his annual letter underscored the profound impact that Munger had on Berkshire Hathaway and Buffett himself. Munger’s humility, wisdom, and guidance were instrumental in shaping the company’s growth and success over the years. The void left by Munger’s passing will undoubtedly be felt at Berkshire’s upcoming annual meeting, where his absence will be deeply felt. As Buffett prepares to carry on without his long-time partner, the legacy of Charlie Munger will continue to resonate within the Berkshire community for years to come.