The Essays of Warren Buffett: Lessons for Corporate America (Fifth Edition)
Warren Buffett
Selected, Arranged, and Introduced by Lawrence A. Cunningham
Carolina Academic Press (2019)

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” Warren Buffett

Here’s what Lawrence Cunningham explains in his Editor’s Note:

“As in the previous editions of The Essays, this one retains the architecture and philosophy of the original edition but adds selections from Warren’s most recent annual shareholder letters….As an aid to all readers, and to enable readers of the previous editions to see what is new in this one, a disposition table at the end of the book [See pages 340-341] shows the various places in this collection where sections from each year’s letter appear. Footnotes throughout indicate the year of the annual report from which essays are taken. To avoid interrupting the narrative flow, omissions of text within excerpts are not indicated by ellipses or other punctuation

“The new edition is called for not because anything has changed about the fundamentals of Warren’s sound business and investment philosophy but because articulation of that philosophy is always delivered in the context of contemporary events and business conditions. So periodic updating is warranted to maintain its currency.”

Readers will also greatly appreciate Cunningham’s brilliant use of annotated footnotes for purposes of attribution and clarification.

* * *

Here are what I think are the key points to be made about this latest edition:

1. Although Cunningham is a gifted thinker and writer, he never intrudes on the narrative, one that is dominated by Buffett but significantly influenced by Charlie Munger.

2. It will be invaluable to those who have read any/all of the previous editions because insights proved in those editions (with rare exception) have even greater relevance now than they did then

3. It will have perhaps even greater value to those who have not as yet read any of Buffett’s essays. I envy them for encountering his insights for the first time.

4. Long ago, I concluded that Warren Buffett’s mind is the single best source for advice on how to maximize the ROI of investments of funds, of course, but also of time, energy, attention, respect, trust, and perhaps most important of all, investments of integrity. Moreover, the business principles on which Buffett focuses are at least as relevant to leadership and management of family-owned businesses, non-profits, and local, county, state, and federal governments as they are to corporate leadership and management.

These are among the passages of greatest interest and value to me:

o Cunningham’s Introduction (Pages 3-27)
o The “groves of Berkshire’s forests” (Page 4)

The passages that follow are from Buffett’s essays:

o “Owner-Related Business Principles” (29-38)
o “The Anxieties of Business Change”(54-60)
o “Value” Investing: A Redundancy (106-112)
o “Cigar Butts and the Institutional Imperative” (119-1220
o Lessons to be learned from cats and derivatives (59-163)
o Investment professionals and unmanaged S&P 500 index funds (180-185)
o Aesop and Inefficient Bush Theory (237-240)
o Satire (274-278)
o Munger on “The Berkshire System” (327-332)

Note: Charlie Munger’s contribution to this volume is his letter to Berkshire Hathaway shareholders for the 50th Anniversary section of the company’s 2014 annual report. It is noteworthy that Buffett mentions him at least once in a third of the essays in the Fifth Edition.

By now Warren Buffett has earned and deserves substantial credit for having a lively and engaging sense of humor as well as (perhaps) the most highly developed business acumen in recent history. Here is the conclusion of Lawrence Cunningham’s insightful Introduction:

“On the perennial topic of Berkshire beyond Buffett, the final essay includes one of Buffett’s many jokes about his personal longevity: if enjoying life promotes longevity, he is jeopardizing Methusalah’s record (969 years). At the symposium featuring this collection [of recollections], someone asked what effect Buffett’s death would have on Berkshire’s stock. Another answered, ‘a negative effect.’ Without missing a beat, Buffett quipped: ‘It won’t be as negative as it will be for me.'”

Let’s all hope that Warren Buffett can (in his friend Carol Loomis’ words) “tap dance to work every day” for many years to come.

FYI: Lawrence Cunningham’s Quality Sharedholders: How the Best Managers Attract and Keep Them (Columbia Businedss School Publishing, 2020) is part of a continuing research project, through the Quality Shareholders Initiative at George Washington University and through his independent consultancy, Quality Shareholders Group.