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Dewhurst, a Buffett-style share in my portfolio, has reported a very pleasing steady improvement in its businesses in this week’s preliminary results – I’ll post a report putting that in context next week.
Also Titon, already my best performer, reported a terrific 48% rise in earnings per share in its prelims published today. I’ll write a report for this too.
And, I think I’ve found a new company for my Modified PE ratio portfolio. I’ll write about this in a week or so.
While I work on these. here is some more of the Buffett story – as usual, containing useful lessons for us today.
The key person rule
As we’ve already learned, Warren needs to hold on to great managers to run his companies. He spotted the brilliance of Abegg very early on – he had shown time and again over 39 years running the bank that he really knew both how to wring out returns, and how to do so at low risk for shareholders.
Despite him being 71, Warren was determined to get him to stay on – which was not very difficult as Abegg wanted to carry on working.
And once he had got his man he paid heed to the following traits:
(a) That company founders who sell to him do not like interference with the business operations, and;
(b) They had far more talent that Warren regarding the sharp end of the business.
Thus Warren adopted a very light touch style, leaving Abegg alone to do his best.
The following tribute shows that Warren’s faith was fully justified:
“Our experience has been that the manager of an already high-cost operation frequently is uncommonly resourceful in finding new ways to add to overhead, while the manager of a tightly-run operation usually continues to find additional methods to curtail costs, even when his costs are already well below those of his competitors. No one has demonstrated this latter ability better than Gene Abegg.” (Letter to BH shareholder, 1978)
Remarkably in the five and a half years following the acquisition the bank paid BH dividends of $20m……………. To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1
