Warren Buffett, the billionaire investor who turned an ageing textile mill into a more than $1.5 trillion (Sh232.5 trillion) conglomerate, said he’s “going quiet”, marking the end of an era for one of the business world’s most watched investing gurus.
In a letter seen by Financial Review, disclosing that he’s donating more than $US1.3 billion to four family foundations, the 95-year-old investor, who is stepping down from his role of Berkshire Hathaway chief executive at the end of the year, said he’s going to stop writing the company’s annual letters and speaking at its meetings.
And while he said he generally feels “good”, he is planning to “step up the pace” of his charitable giving to his children’s foundations while he’s still alive.
“Though I move slowly and read with increasing difficulty, I am at the office five days a week, where I work with wonderful people,” Buffett said in the letter released on Monday (Tuesday AEDT).
“Occasionally, I get a useful idea or am approached with an offer we might not otherwise have received. Because of Berkshire’s size and because of market levels, ideas are few – but not zero.”
Buffett is expected to hand his role of chief executive to his successor Greg Abel at the end of the year. Letters such as the one released on Monday, along with those that accompany the firm’s annual results, have become a must-read for his fans, who seek out the pearls of wisdom, investment advice and witticisms that gave the billionaire investor a major following.
Buffett’s letter on Monday took the same tone, with warnings about corporate greed, along with calls for kindness.
He noted that requirements for executive compensation disclosures backfired as business chiefs engaged in a race to earn more than rivals.
“What often bothers very wealthy CEOs – they are human, after all – is that other CEOs are getting even richer,” Buffett said. “Envy and greed walk hand in hand.”
Buffett also said he wanted to accelerate the pace of his lifetime donations to his children, so they can dispose of his entire estate. But his children – Susie, Howard and Peter – are in their 60s and 70s, with Buffett saying it’d be a “mistake” to wager that they all might enjoy his “exceptional luck” in ageing.
“All three children now have the maturity, brains, energy and instincts to disburse a large fortune,” Buffett said. “They will also have the advantage of being above ground when I am long gone and, if necessary, can adopt policies both anticipatory and reactive to federal tax policies or other developments affecting philanthropy.”
Buffett cautioned that he would want to keep a “significant” amount of Class A shares until Berkshire Hathaway shareholders are as comfortable with Abel as they were with him and his longtime business partner, Charlie Munger.
“That level of confidence shouldn’t take long,” Buffett said. “My children are already 100 per cent behind Greg as are the Berkshire directors.”
He intends to continue to address shareholders in his traditional Thanksgiving missive, which also details his massive philanthropic donations.
Buffett will convert 1800 of Berkshire’s Class A shares into 2.7 million Class B shares, according to the letter. He’ll then give 1.5 million of those shares to the Susan Thompson Buffett Foundation, named for his late wife, and 400,000 to each of his children’s foundations: the Sherwood Foundation, Howard G. Buffett Foundation and NoVo Foundation.
In 2006, the billionaire investor started making donations to the Gates Foundation, as well as to foundations tied to his children. He later started the Giving Pledge with Bill Gates and Melinda French Gates, with the objective to donate his fortune either in his lifetime or at his death.
Last year, Buffett announced that the Gates Foundation wouldn’t receive any more donations after his death, with Buffett’s daughter and two sons overseeing a new charitable trust.
“If my children simply do a decent job, they can be certain that their mother and I would be pleased,” Buffett said. “Their instincts are good and they each have had years of practice with very small sums initially that have been irregularly increased to more than $US500 million annually.”