Berkshire shareholders are probably the most loyal investors on the planet. CHG: There is so much about Buffett that is interesting, but let me ask you to comment on two things. What is his view on private equity?
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What are his confessions? He quickly points out that this is a term that turns facts upside down:. A number of these acquirees, purchased only two to three years ago, are now in mortal danger because of the debt piled on them by their private-equity buyers. The private-equity firms, it should be noted, are not rushing in to inject the equity their wards now desperately need. Emphasis added.
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As for his confessions, he is the only CEO I know who publicly reveals big bloopers. Not only does he confess and take the blame for what went wrong, he typically reveals how much it cost investors. He reports on his biggest blunder in his shareholder letter:. I told you in an earlier part of this report that last year I made a major mistake of commission and maybe more; this one sticks out.
Without urging from Charlie or anyone else, I bought a large amount of ConocoPhillips stock when oil and gas prices were near their peak.
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I in no way anticipated the dramatic fall in energy prices that occurred in the last half of the year. But so far I have been dead wrong. Even if prices should rise, moreover, the terrible timing of my purchase has cost Berkshire several billion dollars. Why is Buffett so candid? He not only feels investor pain, he shares it. CHG: As someone who works at the highest levels of corporate management, you have the ear of some very prominent CEOs.
What do you tell them?
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This is a high stakes strategy, but it can be very successful. Because corporate success depends on tackling, rather than ignoring the elephants in the room. Worse, they will create conditions leading to serious problems. CEOs who can be open to hearing painful truths are truly great leaders.
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Typically, they have nurtured cultures, and promoted senior staff, who prize difficult and constructive debate and questioning. Generating sustainable, reliable financial results depends on taking actions that expose strategic blindspots. Not only does this lead to more motivated employees, more effective execution, stronger corporate value propositions and better stock price valuations — it mitigates future risks.
I can tell from reading shareholder letters which leaders nurture healthy cultures and which do not. Regrettably, it has been my experience that companies that could benefit most from confronting their candor deficiencies are those who choose not to listen.
CHG: What do you think is the role of candor and trust in mending our broken world of economics and finance? Here is what Buffett wrote:. The CEOs and directors of the failed companies, however, have largely gone unscathed. Their fortunes may have been diminished by the disasters they oversaw, but they still live in grand style. CEOs and, in many cases, directors have long benefitted from oversized financial carrots; some meaningful sticks now need to be part of their employment picture as well.
The other three reporters omitted boards of directors, stating only that CEOs should be personally liable.
ISBN 13: 9780071743259
It is their loss.
Βιογραφία συγγραφέα: Rittenhouse L. J.
Following these principles, Buffett has turned Berkshire Hathaway, a struggling textile manufacturer, into one of the most respected companies in the world. Early investors have become billionaires. Warren Buffett is one of the most successful investors in history. His annual letters to Berkshire Hathaway shareholders have attained legendary status among Wall Street and Main Street investors. Each informative and entertaining letter offers lessons about life, business, and the art of investing that are essential to creating long-lasting wealth. In Buffett's Bites , L. These "bites" afford an inside look at Buffett's unconventional ways that have created Berkshire Hathaway's unrivaled success.
Each savory bite is enhanced with practical information and a timeless moral that can be applied to your own wealth-building strategies.
Rittenhouse is president of Rittenhouse Rankings Inc, a CEO strategic and investor relations company that conducts annual benchmark surveys of CEO candor and stock price performance. Her research shows that candor drives superior performance, and companies that consistently strive to promote candor gain competitive advantage and superior valuation.
She advises large-cap and mid-sized companies on how to build internal programs that improve corporate communications and valuation, and specializes in penetrating corporate blind spots to strengthen corporate culture and improve execution. Her contributions to promoting capital stewardship and candor have been recognized by Warren Buffett, Jack Bogle, Jack Welch and other respected business leaders. See All Customer Reviews. The son of a businessman and four-term congressman, Buffett began investing while in high school and throughout college.
But one of his largest influences was Benjamin Graham, an economist who taught him at Columbia University who was an early champion of value investing -- buying shares of companies that are underpriced. The search for value helped propel Buffett's career and fortune through a wide diversity of industries with impeccable timing. His sense of value investing has at times seemed counterintuitive. In the late 's, people perceived the "Oracle of Omaha" was missing the boat as he didn't buy into the explosion in technology companies.
Perhaps the greatest measure of Buffett's investing acumen is the price of stock in his company. Its annual return rate to investors since has averaged In shortly before her death, his wife, Susan, was asked what Warren Buffett's legacy would be. Her answer: His annual letters to stockholders. Rittenhouse has made a study of Buffett's letters to stockholders. Her "Rittenhouse Rankings" charts a correlation between the candor of a CEO's annual letter to shareholders and the company's stock performance: The more candid assessment of the company in the letter, the better a company's stock performs.
Buffett's style in his letters is a blueprint for how he does business.