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July 7, 2020

Warren Buffett on partnership


When it comes to owning shares in Berkshire Hathaway, Warren Buffett’s hope, as spelt out in one of Berkshire Hathaway’s business-related principles in its owner’s manual, is that “you do not think of yourself as merely owning a piece of paper whose price wiggles around daily and that is a candidate for sale when some economic or political event makes you nervous”. The idea is to “visualize yourself as a part owner of a business that you expect to stay with indefinitely”. Berkshire Hathaway does not view its shareholders as “faceless members of an ever-shifting crowd, but rather as co-venturers”. One of Berkshire Hathaway’s owner-related business principles adopts the attitude of treating its business as a partnership although it is corporate in form.

Warren Buffett and Charlie Munger think of their shareholders as “owner-partners”, and of themselves as “managing partners”. “Because of the size of our shareholdings we are also, for better or worse, controlling partners. We do not view the company itself as the ultimate owner of our business assets but instead view the company as a conduit through which our shareholders own the assets.”

Recommended reading:

(1) The Essays of Warren Buffett: Lessons for Corporate America, Third Edition

(2) Berkshire Hathaway Letters to Shareholders, 1965-2013

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