Berkshire Beyond Buffett: Values

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Here’s my latest installment of notes I’ve compiled while I continue to read Larry Cunningham’s wonderful book, Berkshire Beyond Buffett: The Enduring Value of Values. Chapter 6 (“Kinship”) is one of my favorites thus far. It seemed to come alive and really epitomize “the enduring value of values.” I will continue to shares notes in this way as it’s much more efficient (posting a summary of my live-tweets) than trying to go back and put my notes into prose. One-third finished reading, I can already say that Berkshire Beyond Buffett is a keeper for me and should be on your reading list if not already. See my earlier posts (I and II).


Berkshire Beyond Buffett - Larry Cunningham (Columbia Business School)Let me begin by saying that Berkshire Beyond Buffett is not a love fest or aggrandizing of Buffett and Berkshire — far from it — and rather is a solid mix of Berkshire and its subsidiaries’ history and corporate culture, with insights sprinkled throughout. Some of the bad/ugly shared thus far include past difficulties at Benjamin Moore and Gen Re, for example. The attentive reader will recognize and appreciate Cunningham’s adept categorizing and retelling of information.

 

  • Berkshire’s culture of permanence + signif capital resources offer solutions to recurring challenges that vex family businesses.
      • Its culture enables Berkshire to acquire co.’s at lower prices than rival bidders. ‘s Berkshire Beyond Buffett, Ch. 6
      • Berkshire Beyond Buffett subtitle: Enduring Value of Values resonates in Ch 6. Mrs B; RC Willey Home Furn. ok’d BRK’s 1/8th lower bid
      • Early ’70s RC Willey provided custmrs $1.5M of warranty cvg gratis after its 3rd-p warranty fin. co. bankrpt. Cost: $1.5M, gain: priceless
      • More great stories in Ch. 6. RC Willey led furniture indstr in offering cstmr fin w store crdt cards: elim 3rd-p lenders, charge lwr rates.
      • And, love this stealth “float”: RC Willey didn’t have to pay sales tax on credit sales until full amnt due was recv’d. cc
      • Berkshire acqrd RC Willey for $175M in ’95. Latter had $257M sales; $18M+ profits just from credit card ops already in early ’90s!?
        • “Enduring value of values” … Berkshire’s acquisitions not only fit into its culture, but help to *reinforce* it. cc

While reading Berkshire Beyond Buffett, I began thinking out loud whether Buffett’s use of stock in acquisitions over the years, seemingly to avoid debt and to sustain float, was in hindsight a mistake that can be measured on the order of magnitude. Also, it seems it could partially be due to the selling families wanting at least some portion of the deal in Berkshire stock (Cunningham has indeed pointed out this desire at least once thus far).

You might also enjoy another recent post (click the first hyperlink below).

Susan Decker on the Magic of Berkshire Hathaway’s Returns