The wizard-like image of Warren Buffett – entrepreneur, stock-picker and father of a multi-billion-dollar behemoth company that dominates a large swath of the American business landscape – is so sharply drawn that people wonder what will happen when the Oracle of Omaha is gone.
Will Berkshire Hathaway be sold off in lucrative chunks? Will it dwindle in influence? Will any leader be able to cultivate and continue what the 84-year-old Buffett created?
The answer, for one Buffett watcher, is unequivocal.
Cunningham, who lectured to an audience of Fordham University students on Tuesday, enjoyed nearly unfettered access to executives at Berkshire Hathaway and its subsidiaries as he wrote his book and sought to detail what he believes is an extraordinary corporate culture. Berkshire reflects the values of its leader, Cunningham said, but it is not strictly dependent upon Buffett for success.
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Cunningham, a George Washington University professor, began writing about Berkshire Hathaway about 20 years ago. He published The Essays of Warren Buffett: Lessons for Corporate America, and he has watched as the company morphed from what was “a lot like a mutual fund,” owning and trading stocks, to a firm that derives most of its value from wholly owned businesses.
“And yet the company continues to outperform and to prosper,” Cunningham told a packed room at the Walsh Library’s Flom Auditorium on the Rose Hill campus. The event was sponsored by the Gabelli Center for Global Security Analysis.
Berkshire’s prosperity, Cunningham argued, can be traced to company values, nurtured by Buffett, that include integrity, autonomy, frugality and permanence. It seeks out companies that already share those values and tries to keep strong management teams in place. It does not buy, fix and flip its acquisitions. And a measure of trust exists among its executives that when it comes to business, they will do the right thing.
In short, Berkshire is built for the long haul. That, Cunningham said, is exactly what Buffett set out to achieve through deft management and vision.
While Berkshire is made up of an incredibly diverse set of companies – from auto insurance to underwear – the shared values that Cunningham sets out in his book make it likely that the company will continue to prosper, the author said.
There is bound to be uncertainty about Berkshire’s future, but Buffett maintains a sense of humor about his ultimate fate.
During his lecture, Cunningham recounted a years-ago conference at which Buffett, his then wife and longtime deputy Charles Munger were present. Some there began to debate what would happen to Berkshire when Buffett was gone. Would the company’s stock go up? Would the stock go down? Munger protested that this was an uncomfortable subject. Buffett quickly quipped that it was OK.
“But the one thing that everybody in the room needs to remember,” Cunningham recounted as Buffett saying about his eventual demise, “is that it will be a lot worse for me than it will be for the stockholders.”