I was thinking that the single most important factor in the success of a company is the management. That is why it seems Buffett does a big disservice to investors when he tells them he looks for companies that any fool can run. A fool can run any great company into the ground, even with the most pristine of balance sheets and great management can turnaround a company with even the ugliest balance sheet, i.e Apple had 30 days of cash left when Steve Jobs took over in the late 90s. If stocks are for the long term, there is nothing more forward looking then management's vision for innovation and creating customers.





Speak your mind

3 Comments so far

  1. Steve A. on March 28, 2012 9:56 am

    I don’t really agree with your point. I think there are companies that it will be more difficult to run into the ground with poor management. With your example of Apple and Steve Jobs, you are providing an example of a type of company that could only do well with great management.

    There’s a difference between a company where management is extremely important to its success and a company where it is not as important. Buffett looks for the latter.

  2. steve on March 30, 2012 5:42 am

    What Buffett says and what Buffett does are two entirely different things. That is what you larn from Buffett. He pronounces these little quips and then because he is Buffett people assume he has disclosed a cypher that the greatest and largest supercomutes were unagble to do.

    Some years back Berkshire took a big position in Goldman in a convertible preferred . A real sweetheart of a deal. He got some fabulous return on his money and could convert to $115 or some such number.

    My point is are we to believe that some fool could run Goldman? Furthermore look at his portfolio and tell me how many fools you know and then imagine them at the head of the corporations he has stakes in. Come on. What conclusions do you arrive at?

    His corn pone style ukelele playing and Omaha “Aw Shucks” persona only goes so far. And exactly what kind of
    service or disservice does he really perform for a speculator anyway. I personally do not know the man nor have I ever met him. I doubt that he is the person that the media portrays him to be.

    Steve L.

  3. Roger Tompkins on April 20, 2012 4:27 am

    Buffet’s Goldman position was one any fool could manage once in place. The art was in the negotiation of the deal. Buffet’s basic corporate investments are focused on excellent management teams in low-tech companies with very strong franchises.

    He provides their owners with liquidity while exerting very little top down attitude. They line up to visit him.

    He is the ultimate Benjamin Graham advocate.

    Where his speculations are concerned, like his foray into CDS, he is as vulnerable as any gambler and he’s the first to admit it. Those forays are infrequent.

    He is exactly what he appears to be. He is a very smart shark.


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