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CALPers filed the following with the SEC in support of proxy measures 4, 5, 6, and 7 and they also oppose the re-election of Christopher Davis, Susan Decker and Meryl Witmer:

https://www.sec.gov/Archives/edgar/data/919079/000114036123016992/brhc10051155_px14a6g.htm

The Illinois State Treasurer filed the following with the SEC in support of proxy measure 5:

https://www.sec.gov/Archives/edgar/data/1067983/000121465923005016/x46230px14a6g.htm

As I have written on numerous occasions, Berkshire will continue to be pressured by institutions acting with clearly political motives that wish to bully the board into adopting various vapid "ESG" measures. The CALPers statement is particularly vapid, as their management seems oblivious to the extensive disclosures offered by Berkshire subsidiaries, most notably Berkshire Hathaway Energy which regularly posts such information in its SEC filings as well as investor presentations, such as this one from March:

https://www.brkenergy.com/assets/pdf/fiic-presentations/2023-fiic-presentation.pdf

Institutions with political motives will eventually succeed in making Berkshire act as all other mega-caps unless sufficient support exists among remaining Class A shareholders in the decades to come. Unfortunately, I am not optimistic about the chances of Berkshire avoiding the ESG nonsense in the long run given the dynamics of Class A to Class B conversion and the very high price of Class A stock that will force individual investors to convert to B or realize very large capital gains. As I wrote last year, Berkshire could elect to split the Class A shares to reduce the need of individual investors to convert to B:

https://rationalwalk.com/the-case-for-splitting-berkshires-class-a-shares/

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Greg Abel purchased 55 shares of $BRKA on Friday, March 17 at an average cost of $447,259.99. This transaction is worth more than his entire gross pay for 2022. Of course, he does have more money he can invest from last year's sale of his 1% stake in BHE, but I find it hard to criticize a man who now has built a nine figure stake in Berkshire is just a few months. He will likely buy more in the future. A huge vote of confidence from Berkshire's next CEO.

https://www.sec.gov/Archives/edgar/data/1067983/000108131623000009/xslF345X04/wf-form4_167942916524621.xml

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Considering Mrssrs Buffett and Munger’s age, would you invest in BRK today (assuming you weren’t already an investor)?

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Mar 30, 2023Liked by The Rational Walk

Excellent article. Thank you. Other than Susan Decker, I am surprised to see that Howard and Susan Buffett have relatively few shares. It would be interesting to see if there is data on how many ordinary individual shareholders hold more Berkshire shares, both A & B, than a majority of directors. These individuals, especially those with A's, may end up exerting substantial influence on the company's leadership in the not too distant future, as you had inferred in another article. What if the beneficiary's of Dexter Shoes, assuming they still hold 3% of the company (about 42K A shares), decide to seek seats on the board? After Warren's passing, the Gates foundation will likely have the largest ownership of the company. Now that Bill Gates is no longer on the board, how will he wield the potentially pivotal influence on the company's operations, not just in the selection of directors, but potentially in mergers, acquisitions, and CEO selection? Is there a clause that the Gates foundation must always vote with the management? Outside of Warren and Charlies, all other directors together have just 917 A shares. This is not a big hurdle to cross for certain very wealthy individuals and those who have been shareholders since the 1970's and 80's, or their descendants. Maybe these questions can be raised at the annual meeting.

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Although we cannot know for sure, I believe that Susan and Howard both have a large percentage of their net worths in Berkshire. From reading the Buffett biographies, we know that neither of them received large sums from inheritances and are not likely to receive large sums in the future. Also, some of the shares they received as younger people from their grandfather were sold and spent. Both of the Buffett children are there to preserve the culture in the future and I think this is justified.

Berkshire has a shareholder base with an unusually large number of individuals who have a large percentage of their net worths in the company and there should be no shortage of director candidates in the future. The Gates Foundation does own a lot of shares but they are Class B shares and there is a mandate to spend the money fairly quickly. I don't know that the Gates Foundation will exert much influence in the future.

Greg Abel and Ajit Jain have good sized holdings that might increase in the future, particularly for Abel. At least over the next decade to fifteen years, I have few concerns about owner orientation of the board, but beyond that the situation gets foggy. The ESG forces will keep trying to make Berkshire like every other large company -- they are highly ideological, anti-capitalist and/or financially illiterate, and they will be relentless.

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This was a pleasure to read. Thanks!

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Do you know the average price of the investment of Warren / Charlie and Abel in class A & B?

Thanks!

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I wrote about Abel’s investment last year: https://rationalwalk.com/greg-abels-bet-on-berkshire-hathaway/

Warren and Charlie’s cost basis? Very, very low!

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Thanks! I have just seen it :)

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Mar 18, 2023Liked by The Rational Walk

Ravi, I hope you got in a good run up Rock Creek Park. As substantial shareholders—I since 1979–we both admire Berkshire’s culture, which includes: No one should be excluded as a result of race, creed, or color. Let’s hope it stays that way, and that more of this country and the world adopt that view.

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Thanks for the article. If I had been a director since 2007 I would have been buying that stock hand over fist. Strange that she owns so little.

Just googling around it seems she might be worth in the $10 million range however, so maybe $1 million isn’t that far off for “normal” diversification guidelines?

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Mar 18, 2023·edited Mar 18, 2023Author

It would be fine if she's worth $10 million but just looking at her background that is hard to believe. She is on a number of boards currently and had very high level roles for many years in the past, also at firms where she likely had stock based comp. Anyway, I have no idea what she's worth, just seems very probable that she's worth quite a bit more than $10m. I think it's fair to bring up the issue, although in the past I haven't. Her prominence as lead independent director and the enhanced disclosures related to her role made me think it is justified to bring it up.

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Mar 18, 2023Liked by The Rational Walk

Susan Decker should absolutely own more shares of Berkshire as a director. Sounds to me like a question we should all send to Becky Quick for her to potentially ask Susan at the meeting. Is it still berkshirequestions@cnbc.com?

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Yes, I believe so.

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Mar 18, 2023Liked by The Rational Walk

Thank you - interesting read as always

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Mar 18, 2023Liked by The Rational Walk

Since 2007, there have been many times when Ms. Decker could have increased her position at reasonable if not cheap prices. Meryl Witmer surely did. As far as I’m concerned every director should show how much Berkshire stock they own in relation to their total assets. This should be in place at all public companies.

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While I am not sure that having directors publicly disclose their net worth would work without dissuading some qualified people from serving due to privacy concerns, I think we can safely infer that someone like Susan Decker has to be worth at least in the tens of millions of dollars and perhaps more than that. So I would like to see her with $5-10 million in Berkshire stock. There are some others who could also increase their stake. Overall, however, Berkshire's board is miles ahead of almost all others so maybe I should not complain so much...

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Mar 18, 2023Liked by The Rational Walk

You’re right of course! Most people wouldn’t want to publicly disclose their net worth. It was a knee jerk reaction by me, because I’m generally not pleased with many boards.

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My gut reaction is the same as yours. Public awareness of the extremely rich is already well known (Forbes 400, etc), but I think that a lot of directors with net worths in the tens of millions to $100 million would be really hesitant to disclose holdings as % of net worth.

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