“Sure, sure.”
— Sidney J. Mussburger, The Hudsucker Proxy
Apparently some doddering old fart in Omaha, Nebraska published a celebratory letter yesterday in connection with an obscure anniversary some of you might have heard about. Something to do with a mid-range furniture store or failed textile mill or something. Anyway, I felt compelled to read it, if only because every financial pundit in the Western Hemisphere has been recommending its salutary virtues to me with a fervor approaching the evangelical. Personally, I found it more hokey and self-congratulatory than illuminating, but then again I tend to prefer my moral fiber to come unencumbered by six cups of refined sugar and smug self satisfaction per serving. I know, I know: I am downright un-American.
If you care about the content of this man’s nattering—and the compl(i/e)mentary nattering of his partner in cast iron cheer—I would refer you to Matt Levine, who offered a very serviceable summary unburdened by the usual encomia breathlessly showered on this duo by all and sundry. He points out that the success of the business purchasing part of this entity can be neatly reduced to the skill with which the principal buys and sells said businesses, and not hands on management and supervision thereof, which said demiurge studiously avoids. This strikes me as essentially correct. He also calls attention to an aspect of the jolly old elf’s behavior that tends to be overlooked by his cheerleaders: he is a ruthless allocator of the bounteous capital at his command. Far from his image as a genial rich uncle offering cozy and undemanding shelter from the withering blasts of shareholder capitalism to skittish families and corporate management teams in search of a few shekels to renovate their yachts, Mr. Buffett drives a hard bargain going in and, in the event the bloom comes off the rose, delivers an even harder kick in the pants going out.
Warren buys cheap, and then he owns your ass in perpetuity, unless he decides to dump you. Which is just fine, by the way: it’s what his shareholders want him to do, and he has been very successful at it. It just amuses me this incontrovertible characterization seems to elude almost everybody who has gushed about him in the past.
Aaannnyhoo, Warren Buffett is a serial acquirer of companies, inter alia, and he is indisputably good at it. And this explains (if does not condone) the snarky barbs he sends my direction, railing against investment bankers, to which my response is the entire point of this peroration. Now everybody knows, your defensive correspondent included, that nobody likes investment bankers, so I do not anticipate my remarks will undermine the regard in which the Great Man is held by anybody. Nor do I begrudge a beloved financial celebrity and multibillionaire a little fun in kicking the mangy village cur everybody hates, but I do hope to persuade at least a few of you that Mr. Buffett’s critique of my industry is not disinterested.
