Smakprov ur boken jag just läser...(från tid 1981)

av Seawolf , onsdag, april 07, 2010, 16:46 (5136 dagar sedan) @ Tomas E

Inflation was a "gigantic corporate tapeworm" that "preemptively consumes its requisite daily diet of investment dollars regardless of the health of the host organism."34
On Wall Street, inflation had triggered a frantic hunt for corporate assets. Companies, like people, were desperate to convert money to anything other than cash, igniting the takeover mania of the early eighties. Venerable names, such as Del Monte, National Airlines, SevenUp, Studebaker, and Tropicana, were being swallowed up at huge premiums. This spurred the multimillionaire Buffett to adopt the unlikely role of one of Wall Street's most scathing critics.
In his view, the vanity of corporate CEOs was leading to irrational deals. CEOs were, by natural Darwinian selection, excessively energetic sorts, seldom "deficient in animal spirits." They measured themselves by the size of their castle, rather than by Buffett's yardstick of profitability (which to him was the only rational goal). Instead of buying small pieces of companies on the cheap, as Buffett did, these CEOs preferred to take full bites at more than full prices. Not to worry, though-these CEOs, being by the same Darwinian process an egocentric bunch, believed that their talents would justify their paying such lofty prices:
Many managements apparently were overexposed in impressionable childhood years to the story in which the imprisoned handsome prince is released from a toad's body by a kiss from a beautiful princess. Consequently, they are certain their managerial kiss will do wonders for the profitability of Company T(arget). ...We've observed many kisses but very few miracles.35
Buffett wrote that for the 1981 report, when the merger wave was new. The next year, he could not resist a reprise. Many CEOs were paying for acquisitions by issuing shares. Buffett subjected this seemingly innocent technique to a rather savage dissection. In the first place, he observed, the acquiring CEOs weren't only buying, they were also selling. With the issuance of new shares, each ongoing stockholder wound up owning proportionately less of the company than before. The CEOs disguised this fact by using the language of a buyer: "Company A to Acquire Company B." However, "Clearer thinking about the matter would result if a more awkward but more accurate description were used: 'Part of A sold to acquire B.' ..."36
Why was this disguise employed? Most stocks, including most acquirers' stocks, were cheap. In such a case, an acquiring CEO was shopping with unattractive currency, like an American in Paris when the dollar was undervalued. As he collected corporate trinkets he was parting with his own company on the cheap.
Buffett suggested that such managers and directors could "sharpen their thinking" by asking if they would be willing to sell all of their company on the same basis as they were selling part of it. And if not, why were they selling part of it?
A cumulation of small managerial stupidities will produce a major stupidity-not a major triumph. (Las Vegas has been built upon the wealth transfers that occur when people engage in seemingly-small disadvantageous capital transactions.)!?
What got under Buffett's skin was that CEOs were enlarging their personal empires at the expense of shareholders-the very group they were pledged to serve. Such managers "might better consider a career in govemment."38
Buffett likened corporate kingpins to bureaucrats precisely because he knew it would taunt them. In life, Buffett was friendly with many of those CEOs; he sat on their boards. In his letters, he was careful not to name them. Still, he divorced himself from his natural corporate allies. (On white-collar crime: "It has been far safer to steal large sums with a pen than small sums with a gun.")39 There was a whiff about him of Dust Bowl progressivism, yet Buffett was anything but a Prairie socialist. Where the latter loathed businessmen as capitalists, Buffett arrived at his critique via the opposite route. He attacked CEOs for being wards of the corporate state-that is, for being insufficiently capitalist and self-reliant.
This suggests Buffett's most pervasive theme, which was the proper relationship between corporate managers and shareholders, i.e., between the stewards of capital and its owners. In his view, the mangers of other people's money bore a heavy burden, which he demonstrated in 1980, when a change in federal law forced Berkshire to divest the Rockford bank into a separate company. Buffett calculated that the bank was worth 4 percent of Berkshire; then he allowed each shareholder to choose between keeping his or her proportional stake in Berkshire and in the bank, or to take more of one and less of the other, depending on which slice (bank or Berkshire) a holder might prefer. The only one who did not get a choice was Buffett; he would take whatever shares were left. The principle was that he who cut the cake should be happy with the last slice.
In the same spirit, in 1981, Buffett introduced a novel corporate charity plan, conceived by Charlie Munger. For each of its one million shares, then trading at $47°, Berkshire would contribute $2 to charities of that shareholder's choice. Someone who owned one hundred shares could designate the recipients for $200 in gifts, and so on. At other public companies, the choice of charities came from the CEO and the directors. (Only the money came from the stockholders.) Buffett saw this as sheer hypocrisy; not only did the CEO give away his stockholders' dough, he then got to play the big shot at his alma mater, etc. Thus, "Many corporate managers deplore governmental allocation of the taxpayer's dollar but embrace enthusiastically their own allocation of the shareholder's dollar."40
By such words and deeds, Buffett was shaping Berkshire into a very personal vehicle. In effect, he was re-creating it as a public form of the Buffett Partnership. Some of his two thousand or so shareholders were in fact his ex-partners, though most were not. But one purpose of his letters was to attract and knit together a shareholder group who would behave like his partners-in other words, who would stick with him.
The uniqueness of this approach is hard to overstate. At virtually every public company in America, high share turnover is not only the rule, it is devoutly encouraged by the executives. The typical CEO thinks of his investors as a faceless and changeable mass-to use Phil Fisher's analogy, like the diners in a highway road stop. At Berkshire, the turnover was extremely low, which-as was clear from Buffett's letters-was how he wanted his "cafe" to operate: "We much prefer owners who like our service and menu and who return year after year."41
Buffett scribbled his 7,5oo-word letters on a yellow legal pad, during family removes at Laguna Beach. He liked to imagine that his sister Roberta had been overseas for a year, and that he was writing to bring her up to date on the business.42 The letters were edited by Carol Loomis, his friend at Fortune, but they were Buffett's creations and in fact sounded much as he did in conversation, full of homespun expressions and homilies.
The reports were printed on coarse matte paper and bore merely the company name and a vertical black stripe on the cover. Inside, there were no snapshots of chocolates at See's Candy, no photographs of Buffett and Munger with the pensive gaze that chief executives unfailingly employed for such occasions, no pyrotechnics with graphicsjust a mass of type.
In part, Buffett was good at writing annual reports because he was good at reading them. Such reports typically are slick public relations documents, intended to put a gloss on management's performance and to attract new investors. Most contain only a perfunctory message from the CEO, and even that is typically ghostwritten. What Buffett missed in the hundreds that he read each year was a sense of the chief executive talking to him personally, and without the intrusion of professional hand-holders.
Your Chairman has a firm belief that owners are entitled to hear directly from the CEO as to what is going on and how he evaluates the business, currently and prospectively. You would demand that in a private company; you should expect no less in a public company.43
He was most unhappy with CEOs who resorted to that old Buffett bugaboo, changing the yardstick. When results disappointed, they adopted "a more flexible measurement system": i.e., "shoot the arrow of business performance into a blank canvas and then carefully draw the bullseye around the implanted arrow."#
His primers on accountiflg in particular had a moral tone. Given that Wall Street cheers appearances, a CEO with the slightest Pavlovian impulse will be tempted to dress up his company before taking it out. The danger is that, having fooled the public, the CEO will do likewise unto himself. 45 Many run the business so as to maximize not the economic reality but the reported results. "In the long run," Buffett warned, "managements stressing accounting appearance over economic substance usually achieve little of either."46
What should a CEO say to the public? In theory, he ought to describe the business from the same perspective that its managers did. Just as Buffett expected Ken Chace to give him a candid account of the textile mill, Buffett owed a similar candor (though not the same level of detail) to his public investors.

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