2015: What does Ted Weschler bring to Berkshire?

AUDIENCE MEMBER: Hello. Warren, Charlie, it’s a pleasure to be here. My name is Douglas Coburn. I’m originally from Caracas, Venezuela, but I’m here with a large group from Columbia Business School. (Cheers)

My question —

Thank you.

My question is regarding Ted Weschler. Can you please share your views regarding his investment philosophy, his investment process, and the qualities that he brings to Berkshire?

WARREN BUFFETT: Yeah. Well, both Ted and Todd [Combs], the two investment managers, aside from myself, at Berkshire, are very, very smart about businesses and investments.

I mean, they understand the reality of business operations. They understand what makes for competitive strength, and all of the things that you’d learn in business school or learn through investing.

And on top of that, they have qualities of character which are terribly important to me and Charlie.

We have seen dozens and dozens and dozens of investment managers with great records over the years. We used to drop in and see some of those guys, you know, that were running — I’m talking back in the 1960s and ’70s.

And when I gave up my partnership, I knew probably 20 people with great records from the previous six or eight years, but I picked Bill Ruane to handle the funds of my partners going forward.

And he set up a fund called Sequoia Fund, and 10,000 put in that fund has become over $4 million now.

Well, Bill was a terrific investment manager, but he was a terrific human being. And we really want people where they do more than their share, where they don’t claim credit for things they don’t do, where they — you know, they — just every aspect of their personality is such that you want to be around them, and you want to hand responsibility over to them.

And Ted and Todd fit that bill, and there’s plenty of investment managers in Wall Street with great records that don’t fit that bill, in our view. So that’s about all I can tell you.

Charlie met — he met Todd first. I met Ted first. And we both — when we talked about them, we talked about their record and the kind of stocks they owned, but we talked a whole lot more about what kind of people they were and we haven’t been disappointed.

Charlie?

CHARLIE MUNGER: Yeah, I think the whole thing is working pretty well. And I think those people will be constructive around Berkshire for reasons apart from their expertise in handling securities. In fact, they already are.

WARREN BUFFETT: They already very are.

CHARLIE MUNGER: Oh. They’re — they’ve just — each one has helped buy a business recently.

WARREN BUFFETT: Yeah. And they will help oversee it, too, the businesses. They’re smart about business, and they know just exact — they know the right touch to apply in terms of how much they get involved.

I mean, Todd worked on Charter Brokerage. He worked on an acquisition we made from Phillips.

Ted just worked on this operation over in Germany, went over there a couple of times.

And he’s just smart. You know, he’s got good sense. He knows how to deal with people. You know, if a deal is to be made, he’ll get it made.

And we — Charlie and I run into more dysfunctional people with 160 IQs, probably, than anybody alive.

But Salomon gave us a head start on that, as a matter of fact. Wouldn’t you say that —?

CHARLIE MUNGER: We’ve specialized in it.

WARREN BUFFETT: Yeah.

CHARLIE MUNGER: We’ve absolutely specialized in it.

WARREN BUFFETT: We’ve seen — take the Salomon — we’ve seen a group of people whose IQs far surpassed those of people at Berkshire, and we’ve seen them self-destruct to make money they didn’t need, when they were already rich. You know, I mean, see, that’s madness.

But a lot of people are just incapable of functioning well day after day, even though they’re capable of brilliance from time to time.

And we’re looking — we’ve got very solid people in Ted and Todd. They’re very bright and they identify with Berkshire and not with themselves, and that’s a — it’s a huge factor over time.

Any more, Charlie, on that?

CHARLIE MUNGER: Well, yeah. And that trustworthiness is more important than the brains. It’s not that they don’t have the brains, but we wouldn’t hire anybody, no matter how able, if we didn’t trust them.

WARREN BUFFETT: Yeah. Very occasionally — (Applause)

Yeah. We’ll get disappointed on that occasionally, but not very often.