Berkshire Beyond Buffett
I want to talk about the book I read - the book title is Berkshire Beyond Buffett: The Enduring Value of Values. The author of this book, Lawrence A. Cunningham wrote Buffett related books such as 'The Essays of Warren Buffett'.
Berkshire Beyond Buffett and My Indirect Personal Interaction with Berkshire Hathaway
He brings new insights about the inside of Berkshire Hathaway in addition to other books written about Berkshire Hathaway (not written by him). Last year, I visited USA so that I can see and try out some Berkshire's subsidiaries' products.
Without much research about them before I set out to USA, I realised that See Candies' moat is in West side of USA. That is where I often see See Candies products there, not in East side of USA. After returning back from USA, I did a quick search for any available quantitative facts about See Candies. Interestingly, See Candies with limited worldwide store coverage performs equally, more or less, as similar competitors with wider store coverage like Godiva. On the side note, I wish Warren Buffett shows us more quantitative details on annual report like what he did with Nebraska Furniture Mart's financial statement (as at 1946).
Lawrence provided impressive details about how Berkshire used Blue Chip company as a vehicle to acquire Wesco with so much integrity. Similarly, he also showed important details why Warren Buffett and Charlie Munger decided to remove complexity of the ownerships between Berkshire Hathaway, Blue Chip, Blue Chip's subsidiaries.
Lawrence showed us how Berkshire easily acquired many companies on friendly terms. More importantly, he described what National Indemnity Company actually does. Now, I see NICO in the same light as GEICO although they operate different sides of insurance.
Berkshire Hathaway is operating decentralised management style. Based on his book, I conclude that keeping each company's unique culture intact is the key for each company's success. We all know what Warren Buffett did with Benjamin Moore.
Lawrence added few important details about the infamous ethical issue between Berkshire Hathaway, Sokol, and Lubrizol - something we did not seen before on any public media. Any Berkshire Hathaway shareholders will be glad that Warren Buffett handled this matter calmly and honestly although there are some mistakes. In any other workplaces, the bosses tend to over-blow the magnitude of mistakes by shouting at employees who made them. That kind of behavior don't rhyme me well enough. It is because it is always inevitable that we will make mistakes some day. Sometimes, employees and bosses play 'blame game' for the ownership of the mistake - I often found that this game is not very conductive at all.
I am certain that I never saw Buffett's view on Burlington Northern Santa Fe's share price on the public media. Nevertheless, Lawrence brought that detail on his book. I was surprised on how much per share he decide to buy the whole company. It seems to be clear example of fair price for a wonderful company.
By the way, I bought Brooks Transcend shoes at Berkshire Hathaway meeting last year - it is great opportunity for me to replace aging new balance shoes and find out what Brooks running shoes can offer given that Asics is the market leader for running shoes in worldwide market. Before I wore Brooks shoes for the first time, all other shoes I wrote always bring me feet ache after 10-20 mins jogging. However, this Brooks Transcend shoes resolves this problem. Somehow, I feel proud of purchasing this right shoes.
Lawrence wrote how Brooks resolves the problem from Nike/Adidas wannabe to running shoe manufacturer. With the previous paragraph, I am, more or less, convinced that Brooks is on the right track making satisfactory profit for Berkshire Hathaway. By the way, it seems that Brooks pay attention on the reviews on its website and adjust the price accordingly. It is far smarter not to complete competitors with bigger wallet and attractive brand. Attempts to complete such competitors tend to increase the cash burn rate and require higher cash sales and short receivable turnover to replenish cash.
Each time the online forum-ers cite the major reason for either not to own or sell timely Berkshire Hathaway stock is the age of Warren Buffett. For that, I suspect that most of them are not familiar with Berkshire culture. I am pretty comfortable owning Berkshire Hathaway stock for longer periods. Beside the valuation, I think Warren Buffett recognises the problem of Teledyne, Inc. That is when I realised after reading Jim Collins' management-related books. Warren Buffett has been putting suitable managers to run subsidiaries with a lot of autonomy. That surely eliminate the major reason! Jim Collins shows that having the team of the right managers in a company will last the company's longevity and success. I recognise that. If you cannot recognise it early, you probably need more time to understand or you do not have ability to dissect the management operation in your mind.
Conclusion
It is great book. I recommend all Berkshire Hathaway shareholders and followers to read this book. You will realise that there is much more than quantitative data to identify the steadfast success that last Berkshire for few decades and ongoing.
Berkshire Beyond Buffett and My Indirect Personal Interaction with Berkshire Hathaway
He brings new insights about the inside of Berkshire Hathaway in addition to other books written about Berkshire Hathaway (not written by him). Last year, I visited USA so that I can see and try out some Berkshire's subsidiaries' products.
Without much research about them before I set out to USA, I realised that See Candies' moat is in West side of USA. That is where I often see See Candies products there, not in East side of USA. After returning back from USA, I did a quick search for any available quantitative facts about See Candies. Interestingly, See Candies with limited worldwide store coverage performs equally, more or less, as similar competitors with wider store coverage like Godiva. On the side note, I wish Warren Buffett shows us more quantitative details on annual report like what he did with Nebraska Furniture Mart's financial statement (as at 1946).
Lawrence provided impressive details about how Berkshire used Blue Chip company as a vehicle to acquire Wesco with so much integrity. Similarly, he also showed important details why Warren Buffett and Charlie Munger decided to remove complexity of the ownerships between Berkshire Hathaway, Blue Chip, Blue Chip's subsidiaries.
Lawrence showed us how Berkshire easily acquired many companies on friendly terms. More importantly, he described what National Indemnity Company actually does. Now, I see NICO in the same light as GEICO although they operate different sides of insurance.
Berkshire Hathaway is operating decentralised management style. Based on his book, I conclude that keeping each company's unique culture intact is the key for each company's success. We all know what Warren Buffett did with Benjamin Moore.
Lawrence added few important details about the infamous ethical issue between Berkshire Hathaway, Sokol, and Lubrizol - something we did not seen before on any public media. Any Berkshire Hathaway shareholders will be glad that Warren Buffett handled this matter calmly and honestly although there are some mistakes. In any other workplaces, the bosses tend to over-blow the magnitude of mistakes by shouting at employees who made them. That kind of behavior don't rhyme me well enough. It is because it is always inevitable that we will make mistakes some day. Sometimes, employees and bosses play 'blame game' for the ownership of the mistake - I often found that this game is not very conductive at all.
I am certain that I never saw Buffett's view on Burlington Northern Santa Fe's share price on the public media. Nevertheless, Lawrence brought that detail on his book. I was surprised on how much per share he decide to buy the whole company. It seems to be clear example of fair price for a wonderful company.
By the way, I bought Brooks Transcend shoes at Berkshire Hathaway meeting last year - it is great opportunity for me to replace aging new balance shoes and find out what Brooks running shoes can offer given that Asics is the market leader for running shoes in worldwide market. Before I wore Brooks shoes for the first time, all other shoes I wrote always bring me feet ache after 10-20 mins jogging. However, this Brooks Transcend shoes resolves this problem. Somehow, I feel proud of purchasing this right shoes.
Lawrence wrote how Brooks resolves the problem from Nike/Adidas wannabe to running shoe manufacturer. With the previous paragraph, I am, more or less, convinced that Brooks is on the right track making satisfactory profit for Berkshire Hathaway. By the way, it seems that Brooks pay attention on the reviews on its website and adjust the price accordingly. It is far smarter not to complete competitors with bigger wallet and attractive brand. Attempts to complete such competitors tend to increase the cash burn rate and require higher cash sales and short receivable turnover to replenish cash.
Each time the online forum-ers cite the major reason for either not to own or sell timely Berkshire Hathaway stock is the age of Warren Buffett. For that, I suspect that most of them are not familiar with Berkshire culture. I am pretty comfortable owning Berkshire Hathaway stock for longer periods. Beside the valuation, I think Warren Buffett recognises the problem of Teledyne, Inc. That is when I realised after reading Jim Collins' management-related books. Warren Buffett has been putting suitable managers to run subsidiaries with a lot of autonomy. That surely eliminate the major reason! Jim Collins shows that having the team of the right managers in a company will last the company's longevity and success. I recognise that. If you cannot recognise it early, you probably need more time to understand or you do not have ability to dissect the management operation in your mind.
Conclusion
It is great book. I recommend all Berkshire Hathaway shareholders and followers to read this book. You will realise that there is much more than quantitative data to identify the steadfast success that last Berkshire for few decades and ongoing.
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