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Munger on Sokol and Berkshire

May 02, 2011 | About:
Alex Morris

Alex Morris

36 followers
Charlie Munger of Berkshire Hathaway (BRK.A, BRK.B) was interviewed by Betty Liu over the weekend, and gave his two cents on some of the Sokol questions. As usual, Charlie (always good for a chuckle) offers a slightly different perspective than Warren, and is decidedly more direct in his analysis of the situation. He noted that while he has had a limited relationship with David Sokol (specifically in the study of BYD before Berkshire’s investment), he was noticeably “pugnacious and determined,” attributes that have been noted in his management style many times before, well prior to the Lubrizol (LZ) incident.

In regard to life at Berkshire after Sokol, Charlie is far from concerned: “Take somebody who is even more remarkable - Warren. In my opinion Berkshire will flourish after Warren’s gone. I don’t think anybody is essential given the momentum we now have in place.”

Most importantly, the Berkshire system of decentralization isn’t going to change much anytime soon: “It’s the most efficient kind of organization you can possibly have, is a seamless web of deserved trust… why would we change it when it has worked so well just because we’ve had one glitch?”

I agree with Mr. Munger completely: The culture they have created is the reason why people call Warren Buffett when they want to sell and become a part of the corporate umbrella of Berkshire Hathaway. Why they would consider making any major changes as a result of one small issue (that in my opinion has become such a big issue because of the way the story was slowly put together to create the complete picture) is something that I personally think is unnecessary and counterproductive.

Here is the link for the video; enjoy: Munger Interview

About the author:

Alex Morris
I am a recent graduate from the University of Florida; I received a finance degree as well as a real estate minor during my time at UF. I will be sitting for Level 1 of the CFA Exam in December 2011, as well as for my series 65 exam. I am a value investor, plain and simple.

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