Table 14.2
Most Influential Publicly Disclosed Non-Director Owners
Class A Shares Class B Shares Voting Power (%) Economic Interest (%)
FMR (Fidelity) 29,493 10,006,024 3.12 2.20
First Manhattan 18,419 2,438,265 1.91 1.22
Davis Selected Advisers 11,367 2,424,072 1.19 0.79
Ruane Cunniff & Goldfarb 10,710 4,773,987 1.15 0.85
Vanguard Group 3,593 76,265,844 1.15 3.31
Capital Group 9,332 3,067,498 0.99 0.69
Blackrock 1,350 79,992,047 0.96 3.33
State Street 830 78,145,827 0.89 3.22
Norges Bank 6,233 * 0.64 0.38
Gardner Russo & Gardner 4,953 2,317,684 0.53 0.40
Brown Brothers Harriman 4,309 5,130,657 0.49 0.47
Bank of New York Mellon 2,772 18,467,142 0.47 0.92
First Eagle 3,815 * 0.39 0.23
LourdMurray Capital 2,838 472,377 0.30 0.19
Legal & General 2,203 4,700,001 0.27 0.32
Northern Trust Corp. 307 21,215,675 0.25 0.88
Water Street Capital 1,909 3,295,776 0.23 0.25
Intl. Value Advisers 2,068 161,530 0.21 0.13
Markel Corporation 1,752 2,553,764 0.21 0.21
Bank of America 1,307 5,434,334 0.19 0.30
CalPERS 1,427 3,327,100 0.18 0.22
Wells Fargo 1.099 5,363,611 0.17 0.28
Eagle Capital 320 12,625,866 0.16 0.53
Everett Harris 1,480 814,362 0.16 0.12
PNC 1,418 1,237,468 0.16 0.14
Geode Capital * 13,629,477 0.14 0.55
Stewart West Indies 1,335 * 0.14 0.08
INVESCO 1,099 2,057,949 0.13 0.15
Mackenzie Financial 1,249 * 0.13 0.08
Tweedy Browne 1,184 412,914 0.13 0.09
Goldman Sachs 384 5,624,318 0.10 0.25
Morgan Stanley 208 7,497,457 0.10 0.32
American Century 313 1,912,350 0.05 0.10
TOTAL 17.28 % 21.00 %
*Unreported or zero.
Source: Bloomberg (year-end 2013).
America’s blue chip companies tend to have the same largest shareholders, chiefly big banks, investment advisors, and money managers. For example, institutions like Blackrock, Fidelity, State Street, and Vanguard own 2 to 5 percent of the stock of such companies, dominating their shareholder lists. While many also own Berkshire, they are not Berkshire’s dominant shareholders.
Berkshire’s unusual shareholder body thus includes an affiliation of readily coordinated shareholders with a meaningful percentage of the voting power and economic interest that is rare in corporate America. Its sizable group of stalwart shareholders bears a partnership conviction about Berkshire and faith in the owner orientation of the company and its subsidiaries.19 True, their fondness for Buffett overflows, and they believe that no one can replace him, yet they appreciate what he built and believe in its durability beyond him. The voting power they wield will help shape Berkshire’s future.
Successors will therefore find it desirable to adhere to Berkshire’s business model. The pledges of managerial freedom and Berkshire’s continued ownership of acquired businesses create a unique asset. If anyone at Berkshire proposed to preempt managerial authority or sell a subsidiary as if it were mere merchandise, they would be rebuked by a chorus of purists willing to use their voting power accordingly, especially in the election and removal of directors. Berkshire’s subsidiary managers would also object and, in addition to voting their shares, threaten to resign or quit, causing disruption that no successor to Buffett and no Berkshire director would want.
So it is unlikely that Berkshire would soon lose what is distinctive about it and revert to being just another conglomerate or takeover boutique. You can take Buffett out of Berkshire, but you can’t take Berkshire out of the subsidiaries.
For many purposes, the views of the vast majority of Berkshire shareholders will align, particularly amid strong profitability and performance. As a public company, however, Berkshire will face external pressure endangering its commitment to permanence. Large public companies are closely watched by activist shareholders and widely followed by analysts who fixate on quarterly and year-to-year results. Buffett’s presence assures Berkshire’s adherence to its values, including its elongated time horizon; in his absence, a tug-of-war could emerge between owners who share these convictions and more activist investors who prefer short-term gain to long-term value.
Table 14.3
100 Largest Publicly Disclosed Class A Owners
Number of Shares Percentage of Class
Warren E. Buffett 336,000 39.11
FMR (Fidelity) 29,493 3.43
David S. Gottesman 19,538 2.27
First Manhattan 18,419 2.14
Davis Selected Advisers 11,367 1.32
Ruane Cunniff & Goldfarb 10,710 1.24
Capital Group 9,332 1.08
Norges Bank 6,233 0.72
Charles T. Munger 5,324 0.62
Gardner Russo & Gardner 4,953 0.57
William H. Gates III 4,350 0.50
Brown Brothers Harriman 4,309 0.50
First Eagle Investment 3,815 0.44
Vanguard Group 3,593 0.42
LourdMurray Capital 2,838 0.33
Bank of New York Mellon 2,772 0.32
Legal & General Group 2,203 0.25