Comment by harry8
3 months ago
He definitely wants us to think that about his integrity, his fans even more so and in fairness, he's pretty good. Not quite the sunday-school capitalism perfection that some would have us believe. Which can grate a bit if you've looked in detail at his career.
Maybe, but I’m not perfect either. The scale is just different. It’s clear that the standard for rich people isn’t all that high, so in the company of the remaining 1B+ crowd he looks pretty decent.
I’ve never quite understood the meme about Warren Buffett being a More Ethical Billionaire™. The defenses are always like “It’s not fair to judge him solely for BNSF giving rail workers one paid sick day per year because he also owns GEICO, which settled a suit last year about (among other things) illegally surveilling and telling employees to call the police on people that approached them about unionizing”
I've all shareholder letters, about 1500 pages. Please point to whatever you're insinuating.
Off the top of my head, a couple of examples.
The "white knight" purchase of Salomon Bros stake to "save" them from a hostile takeover was a redistribution of wealth from the existing shareholders who would have accepted the deal to him & his fund. Is that evil? No, I don't think so. Is it perfect ethics, that's a personal ethical call. Colluding with management to redistribute wealth from the shareholders professional managers are meant to serve to yourself? Certainly profitable. Salomon managers kept their jobs and bonuses too. Buffet spoke about how impressed with their ethics he was and that being his motivation. Ok.
The purchase of the Goldman's stake during the GFC at what was it a 20% discount to market? Evil? Again no. Did he insist instead of just taking a huge windfall, on underwriting an offer at that price and throwing it open to small investors so anyone who would back the bank in the crisis collects 20% on top of buying on market? That would be hugely admirable, democratic and patriotic but less profitable.
Going to the start, moving Berkshire's pension fund from debt to equity. Did he get the approval of all the pension plan's beneficiaries for that change in risk? He was right, fine, sure. Was that his risk to take on their behalf? Worked out great. Do you want your pension fund manager going against the accepted wisdom on risk? Well you do if it works, but you can't take on the risk in hindsight. There are no shortage of managers who /know/ they're right and the market is wrong, like he did then. Do you want them to act on that with your assets without your full and informed consent? You (and I) do if it's Warren Buffet but he was not Warren Buffet yet.
On the standards of investment managers he is pretty good, as I said. Is he this perfect paragon of ethics. Well his fans seem to think so (and loudly) and they are allowed to. As am I to differ with that assessment. This is worlds away from declaring that Buffet is in league with both Darth Vader and Sauron to torture innocent babies to an early death and a fate of never having heard of Benjamin Graham. I would say he is far more on the right side of things than wrong and has been largely a force for good in the investment industry. "Which of his perfections impresses you the most?" Give me a break. Critical faculties are worth keeping.
Yeah he’s not quite Jack Welch level of dissonance between reality and his fanboys, but he’s hardly some superhero for profiting from the great financialization of the US economy. He made sure his book got bailed out during the GFC. He cheered on Wells Fargo while they opened up a bunch of fraudulent accounts. And so on.
Well yeah, if he wouldn't have profited from the great financialization of the US economy, he couldn't have amassed nearly the wealth that he has amassed, and we wouldn't be talking about him now, so the point is kind of moot. Let's say that, in the cut-throat world of big money, he is (or, at this point, was), one of the nicer guys...
And when he found out about Wells Fargo's behavior, he liquidated the position and has remained out of it. I fail to see the problem with what he did in that case. As a ~5% holder he (Berkshire) had no special control over the company in terms of micro-audits to surface such fraudulent behavior promptly as it was happening.
That’s simply not true. The WSJ started reporting on it in 2011 [0]. Berkshire didn’t fully exit their position until 11 years later in 2022 [1].
[0]https://archive.ph/Gc88k
[1]https://www.cnn.com/2022/05/17/investing/berkshire-hathaway-...
> As a ~5% holder he (Berkshire) had no special control over the company in terms of micro-audits to surface such fraudulent behavior promptly as it was happening.
Apropos of this particular scenario, acting like an individual shareholder with your 5% of a company's stock is helpless to exert influence on the board is not at all accurate. Realistically, at that scale, anyone who holds even 1% is someone you better listen to (not necessarily follow, to be clear) when they pick up the phone.
And that's when its someone who is also not someone who opens their mouth and has millions of followers who also hold stock, like Buffett.