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Legendary Investor Charlie Munger, Warren Buffett’s Right-Hand Man, Dies at 99

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Nov 28, 2023

Charlie Munger, the vice chairman of Berkshire Hathaway and right-hand man to CEO Warren Buffett for over 60 years, has died at the age of 99. Munger’s death marks the end of one of history’s most successful and enduring business partnerships.

Munger Leaves Behind Unparalleled Investing Legacy

Munger, an icon of value investing known for his sharp wit and plain-spoken wisdom, was instrumental in building Berkshire Hathaway into one of America’s most valuable companies. He served alongside Buffett in key leadership roles for decades, offering investment advice, vetting deals, and helping manage Berkshire’s vast portfolio of businesses.

Munger first met Buffett in 1959 and the two soon forged a close working relationship rooted in shared investing philosophies. They believed in making long-term bets on undervalued companies with durable competitive advantages and letting the magic of compound interest do the rest.

This chart shows the utterly staggering long-term outperformance Munger and Buffett were able to achieve by sticking to their principles:

Year Berkshire Hathaway Per-Share Book Value Growth S&P 500 with Dividends Included Growth Outperformance
1964-2023 (59 Years) 3,884,723% 23,454% 16,577%

"Charlie has been my friend and partner for well over 60 years. We’ve had a lot of fun together and made a lot of money together,” said Buffett in a statement.

With Munger’s passing, Buffett loses his most trusted advisor and Berkshire loses the Vice Chairman who, along with Buffett himself, has been the philosophical driving force behind the company’s investment decisions for decades.

Succession Plan Comes Into Focus

While Munger had relinquished his chairman role at Berkshire’s key insurance businesses four years ago in preparation for succession planning, his death puts the spotlight firmly on who will replace the 92-year old Buffett when he eventually steps aside.

Buffett has already announced Greg Abel, who oversees Berkshire’s non-insurance operations, as his likely replacement, and Abel is now the de facto heir. However, Ajit Jain, the insurances chief, had been tipped by many as a potential CEO given his broader remit that spans the company. With Munger now gone, Jain has lost his biggest proponent.

It remains unclear if Buffett has any plans to fast-track his succession timeline now that his long-time business mindmate is no longer around.

“Charlie was the one who had the most influence on Warren in many aspects. So him passing away is quite huge. It creates uncertainty for investors since Munger and Buffett were a package deal,” said Bill Smead, who oversees $4 billion including Berkshire shares at Smead Capital.

With both Buffett and Munger now in their 90s and the heads of Berkshire’s key businesses getting older too, investors are starting to agitate harder for succession clarity. With control of the company still centralized in Omaha, it also raises governance questions, especially if Buffett were to pass in quick succession.

Driving Force Behind Berkshire’s Unique Structure

As Vice Chairman under Buffett’s chairmanship, Munger was instrumental in shaping Berkshire into the highly decentralized conglomerate it is today.

The hands-off structure that gives substantial autonomy to subsidiary heads who can then focus on long-term opportunities is a fundamental tenet Munger preached – trusting managers to reinvest earnings from the businesses they know best.

Berkshire’s unique project funding structure ensured managers had all the capital they needed for growth without resorting to external financing. Munger called this a “seamless web of deserved trust” between parent company and subsidiaries.

This decentralized approach became a competitive advantage – helping Berkshire retain top talent and continue growing value across its vast stable of businesses, even as the holding company maintained an exceptionally small corporate center letting Buffett and Munger concentrate fully on capital allocation.

With Munger’s passing, Berkshire loses the man who was just as much an architect of that structure as Buffett himself. And with Buffett perhaps following in not too distant a future, the pressure on successor management to maintain the core tenets of that winning formula will only intensify further.

Shares Edge Lower on Uncertainty

Berkshire’s class A shares edged 0.5% lower in early premarket trading after news of Munger’s death broke, underperforming versus the broader market. Class B shares saw similar declines.

While the immediate reaction has been muted so far, Munger’s passing may weigh on Berkshire stock for some time given the increased uncertainty. UBS analyst Brian Meredith said the vagueness around succession planning already presented a overhang risk for shares.

“Now take Charlie out of it too, his importance to succession and the acquisition process cannot be overstated. Near term, it presents some headline risk that could further weigh on the stock," said Meredith.

Of course, nothing changes in the short term operationally, with Buffett still at the helm and seasoned managers like Abel and Jain overseeing businesses. But Munger’s unique role as a devil’s advocate and vetting voice leaves big shoes to fill.

Munger’s Legacy – The Wit and Wisdom That Shaped Generations

While Munger may not have been the public face of Berkshire like Buffett, his profile and reputation soared over the years especially among investors who came to idolize his no-nonsense style and worldly wisdom just as much as Buffett’s wit and folksiness.

Despite shunning publicity, his infamous public speeches became cult events, drawing devoted legions of admirers and acolytes hungry for more of his unfiltered commentary and deadpan one-liners on life, business and human misjudgment.

His previous memorable quotes include comparing trading cryptocurrencies to “trading turds” and calling Robinhood’s hyper-charged trading platform akin to opening casinos for people wanting to gamble on stocks.

Munger had unique perspectives on avoiding common human biases thanks in parts to his multi-disciplinary approach – he was a voracious reader across subjects and brought those lenses to bear on diagnosing problems.

At Berkshire’s annual meetings, tens of thousands of attendees packed stadiums to soak in wisdom from two of the greatest business minds of the last centuryshooting the breeze for hours while eating See’s Candy and sipping Coca-Cola. Attendance and local economic impact will likely see declines with Munger no longer holding court alongside Buffett.

While Munger lacked Buffett’s folksy charm, there’s no denying he leaves behind just as much wit and wisdom that will influence generations to come, both inside and outside Berkshire Hathaway.

Closing Thoughts

Charlie Munger’s legacy and business partnership with Warren Buffett is unparalleled in corporate history. The “Woodward and Bernstein of Finance” as they liked to call themselves (a reference to the famous Watergate investigative reporters) will forever be linked for having created hundreds of billions in value for Berkshire Hathaway shareholders over nearly seven decades of compounding growth.

With the great Munger now sadly passed, all eyes turn expectantly to Buffett as Berkshire closes one chapter and inevitably begins transitioning towards the next era under new leadership. For now, Buffett’s reassuring presence provides stability and continuity to allow for gradual change on his watch. But investors hoping for additional clarity on succession plans will surely get louder in their calls.

While his absence leaves enormous shoes to fill, Munger’s ideals and philosophy have become deeply encoded into Berkshire’s business practices and decentralized management psyche. Much as his no-frills yet brutally incisive thinking style influenced multiple generations. As long as Berkshire continues run like he envisioned, Munger’s legacy should endure.

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AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.

By AiBot

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

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