Warren Buffett leads Berkshire Hathaway to new heights at age 94

Warren Buffett turned 94 on Friday, and his sprawling, one-of-a-kind conglomerate has never been worth more than it is today.

Berkshire Hathaway became the first non-tech company to surpass $1 trillion in market capitalization this week. Berkshire’s Class A shares also topped $700,000 apiece for the first time.

Howard Marks, a great independent investor and friend of Buffett, credits three things that allowed the “Oracle of Omaha” to lead Berkshire to new heights, even in his old age.

“It was a matter of well-thought-out strategy, pursued over seven decades with unusual discipline, consistency and insight,” said Marks, co-founder and co-chairman of Oaktree Capital Management. “Discipline and consistency are essential, but not sufficient. Without an unusual perspective, he clearly would not be the greatest investor in history.”

“His record is a testament to the power of compounding at a very high rate for a very long period of time, uninterrupted. He never took a day off,” Marks added.

In the midst of the stock market go-go of the 1960s, Buffett used an investment partnership he ran to buy what was then a failing New England textile company called Berkshire Hathaway. Today, his company is unrecognizable from what it once was, with businesses ranging from GEICO insurance to BNSF Railway, a stock portfolio worth more than $300 billion and a monstrous $277 billion fortress.

Generations of investors who study and imitate Buffett’s investing style have been amazed by his shrewd moves for decades. The Coca cola bet in the late 1980s taught a lesson in patient value, investing in strong brands with wide moats. Injecting a rescue investment into Goldman Sachs in the depths of the financial crisis it showed an opportunistic side during crises. Going all-in Apple in recent years, he has spoken of his flexibility in taking his value approach to a new era.

Buffett made headlines earlier this month by revealing he was divesting half of that Apple stake, ringing the bell a bit on a hugely profitable deal. (While Apple is widely seen as a growth stock, Buffett has long argued that all investments are value investments — “Give some money now to get more later.”

Decades of good profits have snowballed and he has built up an unrivaled track record. Berkshire’s stock has generated an annualized gain of 19.8% from 1965 to 2023, nearly doubling the S&P 500’s 10.2% return. Cumulatively, the stock is up 4,384,748% since Buffett took over, compared to of 31% of the S&P 500223.

“He’s the most patient investor ever, which is a big reason for his success,” said Steve Check, founder of Check Capital Management with Berkshire as its largest holding. “He can sit and sit and sit. Even at his age, where there is not so much time left to sit, he will still sit until he is comfortable. I just think he will continue to do as well as he can until the end. .”

Buffett remains chairman and CEO of Berkshire, although Greg Abel, vice president of Berkshire’s non-insurance operations and Buffett’s designated successor, has assumed many responsibilities at the conglomerate. Earlier this year, Buffett said Abel, 62, would make all investment decisions when he was gone.

Buffett and Marks

Oaktree’s Marks said Buffett has reinforced concepts that are integral to his own approach. Like Buffett, he is indifferent to macro forecasts and market timing; he relentlessly seeks value while sticking to his own circle of competence.

“He doesn’t care about market timing and trading, but when other people are terrified, he steps in. We try to do the same thing,” Marks said.

Buffett, who at Columbia University studied under Benjamin Graham, advised investors to view their stocks as small businesses. He believes that volatility is a big plus for the real investor because it provides an opportunity to take advantage of emotional selling.

Oaktree, with $193 billion in assets under management, has become one of the world’s largest alternative investment players, specializing in distressed loans and bargain hunting.

Marks, 78, has become a sharp, unequivocally contrarian voice in the investment world. His popular investment notes, which he began writing in 1990, are now considered must-reads on Wall Street and even received a glowing endorsement from Buffett himself: “When I see the Howard Marks notes in my mail, they are the first thing I open and always read.

The two were introduced after the Enron bankruptcy in the early 2000s. Marks revealed that Buffett eventually motivated him to write his own book – The most important thing: unusual sense for the careful investor — over a decade ahead of its own schedule.

“He was very generous with his comments. I don’t think that book would have been written without his inspiration,” Marks said. “I had planned to write a book when I retired. But with his encouragement, the book was published 13 years ago.”

Buffett’s track record and his ability to enjoy what he does well into his 90s also struck a chord with Marks.

“He says he goes to work in the morning. He approaches investing with gusto and joy,” Marks said. “I haven’t retired yet and I hope never to, following his example.”