Warren Buffett tours the grounds at the Berkshire Hathaway Annual Shareholders Meeting in Omaha Nebraska. David A. Grogan | CNBC
Warren Buffett shared a heartfelt tribute to the late Charlie Munger, calling his business partner of 60 years the architect of today's Berkshire Hathaway.
In his must-read annual letter Saturday, the 93-year-old “Oracle of Omaha” detailed Munger's instrumental role in helping him expand his conglomerate and reflected on his fruitful and loving relationship with his right-hand man.
“In reality, Charlie was the 'architect' of the present Berkshire, and I acted as the 'general contractor' to carry out the day-by-day construction of his vision,” Buffett wrote. “Charlie never sought to take credit for his role as creator but instead let me take the bows and receive the accolades. In a way his relationship with me was part older brother, part loving father.”
Munger died in November, about a month shy of his 100th birthday. Munger's investment philosophy rubbed off on a young Buffett, giving rise to the sprawling conglomerate worth $900 billion today. Buffett reminisced the beginning of acquiring Berkshire, then a textile mill, and how Munger instilled a blueprint in him to transform the company.
“Charlie, in 1965, promptly advised me: 'Warren, forget about ever buying another company like Berkshire. But now that you control Berkshire, add to it wonderful businesses purchased at fair prices and give up buying fair businesses at wonderful prices. In other words, abandon everything you learned from your hero, Ben Graham. It works but only when practiced at small scale.' With much back-sliding I subsequently followed his instructions,” Buffett wrote in the letter.
Buffett studied under fabled father of value investing Benjamin Graham at Columbia University after World War II and developed an extraordinary knack for picking cheap stocks. It was Munger who made him realize this cigar-butt investing strategy could only go so far, and if he wanted to expand Berkshire in a significant way, it wouldn't be enough.
“Many years later, Charlie became my partner in running Berkshire and, repeatedly, jerked me back to sanity when my old habits surfaced,” Buffett said. “Until his death, he continued in this role and together we, along with those who early on invested with us, ended up far better off than Charlie and I had ever dreamed possible.”
The Omaha-based conglomerate — owner of everything from Geico insurance to BNSF Railway to Dairy Queen ice cream — recently touched consecutive record highs, trading above $620,000 for Class A shares and boasting a market value above $900 billion.
“Berkshire has become a great company. Though I have long been in charge of the construction crew; Charlie should forever be credited with being the architect,” Buffett said.
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