Selling Apple stock — $7.4 billion worth — last year was “prob- ably a mistake,” Warren Buffettsaid at the Berkshire Hathaway annual shareholders meeting on May 1,which, like last year’s, was a virtualaffair, only this time from Los Angeles.With him were partner and vice chairman Charlie Munger and vice chair-men Greg Abel and Ajit Jain. In anCNBC interview a couple days laterBuffett, 90, revealed that Abel, 59, whoheads Berkshire’s non-insurance busi-ness, will be his successor.
The 50-plus-year-old conglomeratehas only in the last few years begun tofocus on investing in high tech. Appleoccupies 44% of the portfolio. Buffettalso owns shares of Amazon — whosestock he began buying in 2019 — andcloud computing company Snowflake, inwhich Berkshire invested $735 millionlast September.
Although Buffett wouldn’t speak to
cryptocurrencies, Bitcoin, specifically,
Munger, 97, had no hesitation, answer-
ing bluntly: “ …The whole damn devel-
opment is disgusting and contrary to the
interests of civilization,” he said.
Which shows Buffett hasn’t aban-
doned his traditional strategy of owning
lower-tech companies, as Adam Mead,
CEO and chief investment officer of
Mead Capital Management, who just
released a 766-page book on Berkshire,
points out in an interview. In our con-
versation, he discusses Buffett’s own
labels for the Berkshire companies:
“great,” “good” and “gruesome.”
“The Complete Financial History of
Berkshire Hathaway: A Chronological
Analysis of Warren Buffett and Charlie
Munger’s Conglomerate Masterpiece”
explores Berkshire’s development year
by year, with Mead digging deep into the
firm’s growth from “a dying textile com-
pany” to the enviable success it is today.
A former commercial loan officer,Mead writes a monthly newsletter,Watchlistinvesting.com. He mentionedthat after sending Buffett a copy of hisbook, he received a thank-you note, nowframed, with “really good praise.” Hereare highlights of our interview:
Investment Advisor: In his 2007shareholders letter, Chairman WarrenBuffett described Berkshire Hathaway’sbusinesses as “good,” “great” and“gruesome.” Please explain.
Adam Mead: He said that a “great”
business earns good returns on capi-
tal and can grow; for example, See’s
Candies — though it doesn’t grow as
much as some others. A “good” busi-
ness might earn a good return on capi-
tal, such as those in Berkshire’s utilities
sector. They have predictable, regu-
lated returns; and as they add money
to the business, there’s a return on
that additional capital. The “gruesome”
ones are, for instance, Dexter Shoe Co.
and what had been Berkshire’s dying
textile business. Dexter was almost like
a shadow of that — production was in
America and not as competitive with
Do those three classifications
No. One company that went throughall three was The Buffalo News. It wasa “great” company; but as the yearswent by, competitive dynamics of thenewspaper business changed, and itbecame a “good” company, which endedup a “gruesome” business. Last yearBerkshire sold all their newspaper businesses because the industry had beendecimated by competition, especiallythe internet.
By Jane Wollman Rusoff
Buffett’s Investments: The ‘Great,’ the
‘Good’ and the ‘Gruesome’
Berkshire Hathaway chronicler Adam Mead discusses Buffett’s worst
investment and the future of the conglomerate.