The Green Machine

Warren Buffet is the green machine. He has consistently outperformed the stock market as well as his rival investors. For a self-effacing, square guy living in Omaha he’s got a pretty cool style. Here’s some background information on his style. I ran across this in the NYT. You can click here to read the full NYT article “Warren Buffet, Delegator in Chief.” I whittled the article down a bit to the parts I found most interesting.

Unlike the chief executive of General Electric, who spends much of his time on airplanes traveling the world to visit the company’s 287,000 employees and oversees a giant campus and management team in Fairfield, Conn., Mr. Buffett “manages” Berkshire’s 257,000 employees with just 21 people at his headquarters in a small office in Omaha.

Mr. Buffett’s business partner, Charles Munger, once described Mr. Buffett’s day. He spends half of his time just sitting around and reading, Mr. Munger said. “And a big chunk of the rest of the time is spent talking one on one, either on the telephone or personally, with highly gifted people whom he trusts and who trust him.”

And that trust has advantages. “Part of his genius is that he’s created a hands-off culture that encourages entrepreneurs to sell their private companies to Berkshire,” said Larry Pitkowsky, a longtime Berkshire shareholder, “and, critically, that they keeping showing up for work every day without worrying that they are going to get a call from headquarters telling them how to run things.” How hands-off is Mr. Buffett? When questioned once about why Berkshire didn’t take a more active role in fixing Moody’s, the troubled credit rating agency, in which he was the largest shareholder, he declared: “I’ve never been to Moody’s. I don’t even know where they’re located.”

“If I thought they needed me I wouldn’t have bought the stock,” he added.

He sees himself less of an activist than as a passive investor, a stock picker with a nose for a good deal. “We don’t tell Burlington Northern what safety procedures to put in or AmEx who they should lend to,” he said at his annual meeting two years ago. “When we own stock, we are not there to try and change people.”

His management approach may be as much a function of his own philosophy as it is a practical preference. He likes to make his investments dispassionately, based on the numbers, rather than let emotions get involved.

What’s Buffett going to do with his billions? Also pretty cool. He crunched the numbers and decided he and his family would be okay if he pledged half or more of it to philanthropy. He was instrumental in starting The Giving Pledge encouraging the wealthiest families to pledge half or more of their wealth to their philanthropic interests. As of December, 2010, 57(!) US billionaires have made the pledge. And in keeping with his easy manner, it’s a moral pledge not a contract. Buffett and Bill Gates are now trying to spread the idea to other countries. Nice style.