When Buffett wants a strategic change, he generally wields his influence behind closed doors
- guardian.co.uk, Tuesday 5 January 2010 17.13 GMT
The world's second richest man, Warren Buffett, is among the most powerful figures in the American business world but it is rare for the Nebraska-based billionaire to pick a fight in public with the management of one of his favoured companies.
Renowned for his witty homilies of homespun wisdom, Buffett, whose personal fortune is estimated at $37bn (£23bn), has chunky stakes in a list of blue-chip corporations ranging from Goldman Sachs and General Electric to ConocoPhillips, Tesco, Johnson & Johnson and Swiss Re.
For all its billions of dollars of weight, his Berkshire Hathaway investment empire adopts a policy of minimal interference in boardroom decisions. Unlike an activist hedge fund, Buffett stresses that he is an investor, rather than a manager, and on the rare instances where he wants a strategic change, he generally wields his influence behind closed doors.
Justin Fuller, a Chicago investment manager who edits a website, Buffettologist, says Buffett's public attack on Kraft's use of shares to bid for Cadbury is a sign that the so-called Sage of Omaha feels he is being ignored by Kraft's board – and that his money could be misused.
"He probably would have said something privately to Kraft's leadership and board," said Fuller. "The fact that he went public with this is significant – it's a shot across their bows."
Back in 2000, Buffett was instrumental in halting a move by Coca-Cola to splash out $15.7bn on food firm Quaker Oats. As a Coke board member and investor, he argued that the move would raise competition issues and was poor value. But his behind-the-scenes opposition only emerged after Coke abandoned the takeover, clearing the way for rival Pepsi to pick up Quaker.
At his annual gathering of Berkshire Hathaway investors in Omaha, Buffett has routinely refused to intervene in corporate decisions including the construction of ecologically controversial Oregon dams by a Berkshire company, Pacificorp. Two years ago, he declined to speak out on links between PetroChina, in which Berkshire had a stake, and a parent firm that did business in war-ravaged Sudan. And he has stood firm as a shareholder in the credit rating agency Moody's despite criticism that it spectacularly failed to see the risks inherent in mortgage-backed securities.
When it comes to matters beyond his own portfolio, Buffett is more outspoken. He demeaned Bank of America's former boss, Ken Lewis, as an "ironic hero" of the global financial crisis. And he threw his weight behind the US government's programme of bank bailouts, warning that the credit crunch was an "economic Pearl Harbour" and that turmoil in the wake of the collapse of Lehman Brothers would "look like Nirvana" without congressional action.Share Investor Links
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