PASADENA, Calif. (AP) -- The two men who run Berkshire Hathaway Inc. have an arrangement: Warren Buffett is the face of the company and Charlie Munger stays mainly in the shadows.
That works well for the two billionaires, who together have developed one of the most successful investment records ever.
But while Munger downplays his own contributions -- he is known for repeating "I have nothing to add" after Buffett's expansive comments at the Berkshire shareholder meetings -- his role is key to much of the company's success.
Buffett himself credits Munger with pushing him beyond his early investing strategies and says the two men have never had an argument -- even though they occasionally disagree.
Munger's influence as vice chairman of Berkshire is considerable, but mostly private.
"He strikes me as somebody who is just a very good sounding board for Warren," said Morningstar analyst Justin Fuller.
Berkshire's board has a plan in place to select a new management team for the time when Buffett and Munger are gone, but whoever takes over the company will have a hard time matching their success and synchronicity.
Munger answers questions alongside Buffett for hours each May at the Berkshire shareholders meeting in Omaha, Neb., and again on his own at the annual meeting in California of Wesco Financial Corp., a Berkshire subsidiary that he leads.
Buffett sometimes relies on Munger to repeat questions because his hearing is better. After one shareholder asked a lengthy question this year about how Buffett got started investing and what mindset an investor should have, Buffett turned to Munger for help.
So Munger summed it up: "He wants you to instruct him how to become less like a lemming."
When Munger does weigh in, he often cuts through Buffett's longer answer to its heart. And sometimes he critiques Buffett's response.
"Well, that was real useful advice," Munger said this year after Buffett answered a question about choosing good managers by saying Berkshire buys businesses with strong management teams in place. Then he compared that to saying the best way to get through lean times is to keep a couple million dollars lying around.
He can get away with rebuking the world's richest man because they've been friends for nearly 50 years.
Munger, who at 84 is seven years older than Buffett, grew up in Omaha about five blocks from Buffett's current home. Both men worked at the grocery store Buffett's grandfather and uncle ran.
By the time they met at an Omaha dinner party in 1959, Munger was practicing law in Southern California and Buffett was running an investment partnership in Omaha.
"We hit it off," Buffett said. "We were soon rolling on the floor laughing at our own jokes."
After that initial meeting, Buffett and Munger kept in touch through frequent telephone calls and lengthy letters, according to the biography in Munger's book "Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger."
The two men shared investment ideas and occasionally bought into the same companies during the 1960s and '70s. They became the two biggest shareholders in one of their common investments, trading stamp maker Blue Chip Stamp Co., and through that acquired See's Candy, the Buffalo News and Wesco. Munger became Berkshire's vice chairman in 1978, and chairman and president of Wesco Financial in 1984.
Most of Munger's roughly $2 billion fortune comes from his 15,181 Class A Berkshire shares, which represent about 1.4 percent of the outstanding shares. The $100,000 salaries Munger and Buffett both receive from Berkshire haven't changed in more than 25 years.
Berkshire's book value -- assets minus liabilities -- per share has grown from $19 43 years ago to $78,008 now under their leadership -- despite Munger and Buffett living more than 1,500 miles apart during the entire time they've worked together.
They organized Berkshire Hathaway so they wouldn't ever have much to do besides sit around and think. And that's still how they run the company today, even though it has grown to include roughly 250,000 employees and more than 70 subsidiaries.
"Neither Warren nor I is smart enough to make the decisions with no time to think," Munger said. "We make actual decisions very rapidly, but that's because we've spent so much time preparing ourselves by quietly sitting and reading and thinking."
The real key to Berkshire's success, Munger said, is that he and Buffett like learning and have improved over time. But Munger gives Buffett most of the credit.
"Mr. Buffett is by far the most important person," Munger said in an interview. "And to a huge degree why Berkshire Hathaway is the length and shadow of Warren Buffett."
Munger compares his role at Berkshire to that of Albert Einstein's professional colleagues.
"Practically everybody works better when not in extreme isolation," Munger said. "If Einstein had worked in total isolation, he would not have been as productive as he was. He didn't need a great deal of contact with other colleagues, but he needed some."
But Buffett credits Munger with pushing him beyond value investing.
"Charlie has taught me a lot about valuing businesses and about human nature," Buffett said.
Buffett's early successes were based on what he learned from former Columbia University professor Ben Graham. He would buy stock in companies that were selling for less than their assets were worth, and then, when the market price improved, sell the shares.
"Charlie says, 'You know, let's give this up, and really buy into some fine businesses,"' Buffett said.
Berkshire now prefers to buy and hold businesses for the long term, if not forever.
"Charlie got me started in the right direction on that, and he's had to nudge me back to that periodically," Buffett said while sitting next to Munger at a recent news conference.
Munger deflected Buffett's praise.
"Warren transformed my life way more than I transformed his," Munger said. "He talked me into giving up the law."
As chairman, CEO and president of Wesco -- which is 80 percent owned by Berkshire -- Munger consults with Buffett on the company's investment decisions and major capital allocations, much like Buffett consults with Munger about Berkshire decisions.
Wesco includes Kansas Bankers Surety Co., which offers specialized insurance to banks; CORT Business Services, which rents furniture to companies; and Precision Steel, which buys scrap metal, cuts it to order and resells it.
The company has its own publicly traded stock, so it must hold its own annual meetings. It generated about $109 million profit for Berkshire in 2007. Fewer than 10 people work at Wesco's Pasadena headquarters, compared to Berkshire's 19-person world headquarters.
Munger maintains a small office with a secretary in Los Angeles.
He spends less time on Berkshire than he used to, because he's devoting more time to his philanthropy, community service and large family. Munger has been married to his second wife, Nancy, for more than 50 years, and they have eight children between them.
Munger has given significant gifts to Harvard-Westlake, Stanford University Law School and the Huntington Library as well as other charities. He serves on the boards of Good Samaritan Hospital and the private Harvard-Westlake School in Los Angeles. He also serves on the board of Costco Wholesale Corp. and is chairman of the Daily Journal Corp.
"I certainly do more other pursuits as I get older, including recreational pursuits," said Munger, who enjoys bass fishing and entertaining on his 85-foot-long catamaran. "But I love Berkshire. Anything at all important to Berkshire that needs time from me I certainly give it."
Munger has always been modest about his role at Berkshire, and has been willing to avoid most of the limelight, said Andy Kilpatrick, the stockbroker-author of "Of Permanent Value, the Story of Warren Buffett."
"It's not easy to get two superegos to run something and one of them take the front seat totally and the other take the back seat," Kilpatrick said. "I think he's probably been a huge input all along and hasn't tried to claim it."
But Buffett and Munger found a way to run Berkshire without a clash of egos."It's a real privilege to be associated with a place like Berkshire," Munger said. "I think we have more fun doing what we do than practically anybody.
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