Many from Chicago's business elite will be at Berkshire Hathaway's annual shareholder meeting in Omaha, Neb., this weekend absorbing Warren Buffett's wisdom.
To name a few: Morningstar CEO Joe Mansueto; Ariel Investments CEO John Rogers; Byron Trott, founder of BDT Capital Partners; The Pampered Chef CEO Marla Gottschalk and founder Doris Christopher, who sold the company to Berkshire in 2002; and John Freund of Citigroup's Chicago office.
Freund executes Buffett's trades: buy this, sell that. They talk frequently, even on holidays, "depending on what markets we're dealing in around the world," Freund said in a rare interview. If he is executing a trade for Buffett in London, they're on the phone at 7 a.m. If it's in Asia, they're on the phone at 9 p.m., a call that often interrupts Buffett's online bridge games.
Freund grew up in St. Louis and moved to Chicago in 1974 to work for Salomon Brothers. Three years later, when Salomon shut down its St. Louis office, where Freund once worked, the Chicago office absorbed the firm's Nebraska-based clients. A friend of Freund's from graduate school at Columbia University, which Buffett also attended, reintroduced the two in the mid-1980s, Freund said.
That's when Freund picked up Buffett's business. And as Buffett's profile has grown, so has his need for secrecy when trading. Salomon is now part of Citigroup, which masks Freund's trading so not even his colleagues can see what The Oracle is buying, information that would run up prices and kill Buffett's chances to further acquire stock at a value.
Freund has brought his wife, Penny, with him to Berkshire Hathaway's annual meeting for 21 out of 22 years. He recalls attendance at his first meeting numbering about 350. This year, it's expected to be 40,000.
"It's like meeting family every year," he said. "We sit in the same area with the same people who save the same seats."
For years, Rogers passed on going to meetings, until Freund, his neighbor, convinced him to make the trip about five years ago.
"As much as I have read everything on Warren Buffett, and all of my career viewed him as sort of my role model and embodying what I think a successful investor is all about, I didn't go to the meetings," Rogers said. "I am now kicking myself I didn't go in the early years."
Rogers adopted Buffett's value investing strategy and named one of Ariel's conference rooms after him. Joining Rogers will be Mellody Hobson, chairman of Ariel's mutual fund board of trustees, as well as investment committee Senior Vice Presidents John Miller, Timothy Fidler and Matthew Sauer and committee Vice President Kenneth Kuhrt.
"I think the No. 1 reason to go is to sit and listen to Warren and (partner) Charlie (Munger) talk about their views on the markets and the economy," Rogers said. "The No. 2 reason is that a core group of investment managers believe in Warren so much, they come to the conference. It's an opportunity to rub shoulders with people I have enormous respect for, find ways to have a drink with them and catch up."
Mansueto also started his career idolizing Buffett and credits him with sparking his interest in securities analysis.
"The single-most profound effect on my business thinking over the past 20 years has been the investment philosophy of Warren Buffett," Mansueto told Inc. magazine in 1999.
At that time, Mansueto had only met Buffett once. He told Inc.: "It wasn't so much a meeting as a brief audience. The day before the big meeting, Buffett held a series of small interviews with select media, of which Morningstar was one. Four of us from Morningstar trooped in together, and we got to spend 15 minutes with Buffett and his partner, Charlie Munger."
Mansueto said he also is bringing a team with him this year, including Pat Dorsey, Morningstar's director of equity research, and Paul Larson, editor of the StockInvestor newsletter.
"As for Warren, I've gotten to know him a little better," Mansueto said this week. "I've talked to him a few times over the past year or so and exchanged letters."
Trott probably wishes Buffett would quit mentioning him in his annual letter to shareholders, as the former Goldman Sachs investment banker eschews media attention more than most.
Known as the only investment banker Buffett likes, Trott previously led Goldman Sachs' Chicago office. He helped Buffett put at least three deals together before earning kudos in an annual letter to shareholders. Trott "understands Berkshire far better than any investment banker with whom we have talked and — it hurts me to say this — earns his fee," Buffett wrote in 2003.
In 2008, Trott helped Buffett with Mars' purchase of the William Wrigley Jr. Co. and his $5 billion injection of capital into Goldman Sachs. Now with BDT, Trott has sought funding from some of the Midwest's wealthiest families and, according to the Financial Times, has raised more than $2 billion in capital as of June 2009. The Financial Times also reported last year that Berkshire Hathaway's investment in BDT is less than $250 million.
Trott declined to comment for this article. However, a BDT spokeswoman confirmed Trott would attend the meeting.
Gottschalk's experiences at the meeting are different from the rest of this group. For one, as CEO of a Berkshire Hathaway subsidiary, she gets a reserved seat and doesn't have to wait in line.
"If not, I wouldn't get a seat," she joked.
And The Pampered Chef booth sells out of kitchenware every year.
"I get there very early before the doors open and see that the booth and products are all set up and ready to go," she said. "We bring a sampling of products, and every year we wish we would have taken more. We can't take the whole warehouse because there's not enough room.''
As for Buffett, Gottschalk said it's true that he takes a hands-off approach to managing Berkshire Hathaway companies.
"But I will tell you he certainly is always available if ever I have anything I want to ask him about," she said.
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