Nov 28 (Reuters) – Charlie Munger, a close friend of Warren Buffett, died on Tuesday at the age of 99, leaving a void at Berkshire Hathaway (BRKa.N) that investors said was impossible to fill despite the group’s well-established succession plan.
Berkshire said Munger died peacefully at a hospital in California, where he lived. No reason was given. Munger would have turned 100 on January 1.
“Berkshire Hathaway could not have been built to its current position without Charlie’s inspiration, wisdom, and involvement,” Buffett, Berkshire’s 93-year-old chairman and CEO, said in a statement.
The death of Munger, Berkshire’s vice chairman since 1978, marks the end of an era in corporate America and investing.
Along with Buffett, Munger was respected and adored by investors around the world, many of whom flocked to Berkshire’s annual shareholder weekends in Omaha, Nebraska, to hear the duo’s popular wisdom about investing and life.
Although Munger was not involved in Berkshire’s day-to-day operations, his death left Buffett without a sounding board for a long time.
Investors also said that while Berkshire had appointed managers it could trust to keep the company going, Munger’s loss would be deeply felt and lead to an outpouring of grief.
“It’s a shock,” said Thomas Russo, a partner at Gardner Russo & Quinn in Lancaster, Pennsylvania, and a longtime Berkshire shareholder. “It will leave a huge void for investors who have shaped their thoughts, words and activities around Munger and his ideas.”
Since becoming Berkshire’s vice chairman, Munger has worked closely with Buffett on allocating Berkshire’s capital and not mincing words when he thought his business partner was making a mistake.
“He was certainly one of the greatest investors, teaming with Buffett,” said Rick Meckler, a partner at Cherry Lane Investments in New Jersey. “I’m sure it’s a huge loss for Buffett personally.”
Munger was known for steering Buffett away from buying what Buffett called “cigar butts” — mediocre companies that only had a puff of smoke left and could be purchased at very cheap prices — and instead favored quality.
“Charlie felt that buying very good companies at fair prices that could continue to multiply cash flow and reinvest it in continued growth was more consistent with the philosophical way he and Warren liked to invest,” said Paul Lontzis, president of Lontzis Asset Management in Wyomissing. Pennsylvania. “They loved owning the business forever.”
Money manager Whitney Tilson, who knew Munger personally, said that “a generation of investment managers” learned some of their skills from Munger and Buffett.
“What really stuck with these men was their advice on living a full life by teaching people how to think clearly, be honest with themselves, learn from mistakes and avoid disasters,” he said.
Tilson said he attended dozens of meetings run by the men, and that Munger once quipped to a private audience: “All I want to know is where I’m going to die so I never go there.”
Berkshire is unlikely to replace Munger and has not publicly discussed any need or desire to do so.
Two other vice presidents, Greg Appel and Ajit Jain, provide day-to-day oversight of Berkshire’s non-insurance and insurance businesses, respectively.
Munger’s death comes one week after Buffett donated about $866 million in Berkshire stock to four family charities and issued a rare letter to shareholders acknowledging that his time is limited, at the end of his investing career.
In a letter last week, Buffett said Berkshire was “built to last” and would remain in good hands without him.
He has never publicly expressed a desire to step down, including after he was diagnosed with prostate cancer in 2012.
“At 93 years old, I feel fine but I am acutely aware that I am playing extras,” Buffett wrote.
Under Berkshire’s succession plan, which Munger inadvertently mentioned at Berkshire’s 2021 annual meeting, Appel will become CEO once Buffett is out of office.
Buffett’s son Howard will become non-executive chairman, and one or two portfolio managers will handle the investment.
Berkshire’s businesses include railroad BNSF, auto insurance company Geico, and a host of energy, industrial and retail operations, as well as familiar consumer names such as Dairy Queen, Duracell, Fruit of the Loom and See’s Candies.
It also owns hundreds of billions of dollars in stocks, led by Apple (AAPL.O).
Changes without Charlie
Perhaps the most noticeable change to the public after Munger’s death is the annual Berkshire Weekend, which attracts tens of thousands of people to Omaha and is broadcast live around the world.
Munger will no longer be around to share the stage with Buffett and answer dozens of shareholder questions over five hours.
Abel and Jane, who have answered some of these questions in recent years, may play a larger role.
“The Annual Meeting would not be the same without Charlie’s concise, frank and honest comments,” Lountzis said. “He was very different from Warren in the sense that Charlie said what he thought and didn’t care what anyone else thought.”
“Berkshire may be less fun without him,” Russo added.
(Reporting by Jonathan Stempel in New York – Preparing by Muhammad for the Arabic Bulletin) Additional reporting by Louis Krauskopf, Svea Herbst-Baylis and Chibuike Ojoh; Editing by Megan Davies, Rosalba O’Brien, and Lisa Shoemaker
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