The People Behind Warren Buffett
Turns out it's who you're with that really matters
Todd Wenning is the founder of KNA Capital Management, LLC, an Ohio-registered investment advisor that manages a concentrated equity strategy and provides other investment-related services.
At the time of publication, Todd, his immediate family, and/or KNA Capital Management, LLC or its clients owned shares of Berkshire Hathaway
Please see important disclaimers.
Like many of you, I read Buffett’s Thanksgiving Message this week. And as is the case with most of Buffett’s letters, I ended up reading it a few times, picking up something new with each passing.
Yesterday, I had one of my classes at The University of Dayton read it and discuss it as well.
While this may not be Buffett’s final letter to shareholders - he left the door open for future Thanksgiving letters - it was written as if it could have been. And when one of the world’s most successful investors and businessmen want you to know what matters in life, it’s worth taking the time to read it.
The students don’t carry the same history with Buffett that my investing friends and I do, so I was curious to hear their thoughts.
They picked up on the key messages: acknowledging the role of luck in life, thanking America for its opportunities despite its flaws, valuing every individual regardless of wealth status, and writing your own obituary and then living up to it.
The reason I had this particular class read it is that the course is called “Applications of Sustainable Investing.” In the course, we cover ESG themes, but we also take a broader definition of sustainability and consider economic moats, stewardship, and financial strength in our analysis.
Buffett’s letter is filled with discussions of social (like the role of systemic luck) and governance (like excessive CEO pay) issues, but made no mention of environmental matters.
When I asked my students about that omission, one of them made an observation that struck me as exactly right: when you work with people of high character, environmental risks tend to be managed responsibly.
Berkshire owns several businesses where environmental exposure simply comes with the territory, but leaders who aren’t trying to become “look-at-me rich” (as Buffett puts it in the message) generally prefer to avoid reckless behavior of any kind, environmental or otherwise.
Indeed, Buffett has long emphasized the importance of working with people of high character and integrity.
While you can’t eliminate risk in life, risk can be managed by associating with people of good character. The kicker is that this also leads to outsized opportunities in life and business. It mirrors Buffett’s investing philosophy: manage downside risks, maximize upside opportunity.
Buffett’s Thanksgiving Message makes no mention of his big investment wins in life. Only people. As Buffett showed us, looking back on 80 years in business, what matters most are the people behind you and behind your business. Surround yourself with good people and good things tend to happen.
Stay patient, stay focused.
Todd