Charles Munger, the alter ego, sidekick and foil to Warren Buffett for almost 60 years as they transformed Berkshire Hathaway Inc. from a failing textile maker into an empire, has died. He was 99.
He died on Tuesday at a California hospital, the company said in a statement. He was a longtime resident of Los Angeles. “Berkshire Hathaway could not have been built to its present status without Charlie’s inspiration, wisdom and participation,” Buffett said in the statement.
Munger was vice-chairman of Berkshire and one of its biggest shareholders, with stock valued at about US$2.1 billion as of March 2, 2022. His overall net worth was about US$2.5 billion at the start of 2023.
At the company’s annual meetings in Omaha, Nebraska, where he and Buffett had both grown up, Munger was known for his roles as straight man and scold of corporate excesses. As Buffett’s fame and wealth grew — depending on Berkshire’s share price, he was on occasion the world’s richest man — Munger’s value as a reality check increased as well.
“It’s terrific to have a partner who will say, ‘You’re not thinking straight,’” Buffett said of Munger, seated next to him, at Berkshire’s 2002 meeting. (“It doesn’t happen very often,” Munger interjected.) Too many chief executives surround themselves with “a bunch of sycophants” disinclined to challenge their conclusions and biases, Buffett added.
Buffett credited Munger with broadening his approach to investing beyond mentor Benjamin Graham’s insistence on buying stocks at a fraction of the value of their underlying assets. With Munger’s help, he began assembling the insurance, railroad, manufacturing and consumer goods conglomerate that posted nearly US$24 billion of operating profit in 2019.
“Charlie has always emphasized, ‘Let’s buy truly wonderful businesses,’” Buffett told the Omaha World-Herald in 1999.
That meant businesses with strong brands and pricing power. Munger nudged Buffett into acquiring California confectioner See’s Candies Inc. in 1972. The success of that deal — Buffett came to view See’s as “the prototype of a dream business” — inspired Berkshire’s US$1 billion investment in Coca-Cola Co. stock 15 years later.
The acerbic Munger so often curbed Buffett’s enthusiasm that Buffett jokingly referred to him as “the abominable no-man.”
“At what price would you be comfortable?” Buffett asked.
“Probably at a lower price than you,” Munger parried.
From Los Angeles, Munger spoke frequently by phone with Buffett in Omaha. Even when they couldn’t connect, Buffett claimed he knew what Munger would think. When Munger missed a special meeting of Berkshire shareholders in 2010, Buffett brought a cardboard cutout of his partner on stage and mimicked Munger saying, “I couldn’t agree more.”
Munger was an outspoken critic of corporate misbehaviour, faulting as “demented” and “immoral” the compensation packages given to some chief executives. He called Bitcoin “noxious poison,” defined cryptocurrency generally as “partly fraud and partly delusion” and warned that much of banking had become “gambling in drag.”
“I love his ability to just cut to the heart of things and not care how he says it,” said Cole Smead, CEO of Smead Capital Management, a longtime Berkshire investor. “In today’s society, that’s a really unique thing.”
Though Munger aligned with the U.S. Republican Party, and Buffett sided with Democrats, the two often found common ground on issues like the desirability of universal health care and the need for government oversight of the financial system.
But while Buffett would tour the world urging billionaires to embrace charity, Munger said a private company like Costco Wholesale Corp. — he served on its board for more than two decades — did more good for society than big-name philanthropic foundations.
With his own donations, Munger promoted abortion rights and education. He served as chairman of Good Samaritan Hospital in Los Angeles. Multimillion-dollar bequests to the University of Michigan and the University of California at Santa Barbara for new housing facilities gave him an opportunity to indulge a passion for architecture — though his vision for a 4,500-person dormitory on the Santa Barbara campus drew howls of protest in 2021 because the vast majority of bedrooms are to have no windows.
Though he never rivalled Buffett in terms of worldwide celebrity, Munger’s blunt manner of speaking earned him a following in his own right.
At the 2011 meeting, the last before Berkshire took complete control of Wesco, Munger told his audience, “You all need a new cult hero.”
Charles Thomas Munger was born on Jan. 1, 1924, in Omaha, the first of three children of Alfred Munger and the former Florence Russell, who was known as Toody. His father, the son of a federal judge, had earned a law degree at Harvard University before returning to Omaha, where his clients included the Omaha World-Herald newspaper.
Munger’s initial brush with the Buffett family came through his work on Saturdays at Buffett & Son, the Omaha grocery store run by Ernest Buffett, Warren’s grandfather. But the two future partners wouldn’t meet until years later.
Munger entered the University of Michigan at age 17 with plans to study math, mostly because it came so easily. “When I was young I could get an A in any mathematics course without doing any work at all,” he said in a 2017 conversation at Michigan’s Ross Business School.
In 1942, during his sophomore year, he enlisted in the Army Air Corps, soon to become the Air Force. He was sent to the California Institute of Technology to learn meteorology before being posted to Nome, Alaska. It was during this period, in 1945, that he married his first wife, Nancy Huggins.
Lacking an undergraduate degree, Munger applied to Harvard Law School before his Army discharge in 1946. He was admitted only after a family friend and former dean of the school intervened, according to Janet Lowe’s 2000 book, Damn Right! Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger. Munger worked on the Harvard Law Review and in 1948 was one of 12 in the class of 335 to graduate magna cum laude.
With his wife and their son, Teddy, Munger moved to California to join a Los Angeles law firm. They added two daughters to their family before divorcing in 1953. In 1956, Munger married Nancy Barry Borthwick, a mother of two, and over time they expanded their blended family by having four more children. (Teddy, Munger’s first-born, had died of leukemia in 1955.)
“Like Warren, I had a considerable passion to get rich,” Munger told Roger Lowenstein for Buffett: The Making of an American Capitalist, published in 1995. “Not because I wanted Ferraris — I wanted independence. I desperately wanted it. I thought it was undignified to have to send invoices to other people.”
His fateful introduction to Buffett had come during a 1959 visit home to Omaha. Though the precise venue of their first meeting was the subject of lore, it was clear they hit it off right away. In short order they were talking on the telephone almost daily and investing in the same companies and securities.
Their investments in Berkshire Hathaway began in 1962, when the company made men’s suit linings at textile mills in Massachusetts. Buffett took a controlling stake in 1965. Though the mills closed, Berkshire stuck around as the corporate vehicle for Buffett’s growing conglomerate of companies.
Using that pool of capital, Buffett and Munger bought controlling shares in See’s Candies, the Buffalo Evening News and Wesco Financial, the company Munger would lead.
In 1975, the U.S. Securities and Exchange Commission alleged that Blue Chip Stamps had manipulated the price of Wesco because Buffett and Munger had persuaded its management to drop a merger plan. Blue Chip resolved the dispute by agreeing to pay former investors in Wesco a total of about US$115,000, with no admission of guilt.
The ordeal underscored the risks in Buffett and Munger having such complicated and overlapping financial interests. A years-long effort to simplify matters culminated in 1983 with Blue Chip Stamps merging into Berkshire. Munger, whose Berkshire stake rose to two per cent, became Buffett’s vice-chairman.
In recent years, Munger’s fans continued to travel to Los Angeles to ask him questions at annual meetings of Daily Journal Corp., a publishing company he led as chairman. He displayed his knack for investing by plowing the company’s money into temporarily beaten-down stocks like Wells Fargo & Co. during the depths of the 2008-2009 financial crisis.
Munger was for many years more bullish than Buffett when it came to investing in China. Berkshire became the biggest shareholder of Chinese automaker BYD Co., for instance, years after Munger began buying its stock, though Berkshire began trimming that stake in 2022.
Munger started sharing his vice-chairman title at Berkshire in 2018 with two next-generation senior executives, Greg Abel and Ajit Jain, who were named to the board in a long-awaited sign of Buffett’s succession plans.
It was Munger himself who, three years earlier, had signalled their likely promotion with praise delivered in his signature fashion: with a backhanded swipe at the boss.
“In some important ways,” he wrote of Abel and Jain in 2015, “each is a better business executive than Buffett.”
—With assistance from Katherine Chiglinsky and Max Reyes.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Companies in this story: (TSX:TRZ)
The Canadian Press. All rights reserved.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
Companies in this story: (TSX:DOL)
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
Companies in this story: (TSX:TD)
The Canadian Press. All rights reserved.
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