Join us as we have the pleasure of sitting down with author and Queen of Candor, Laura Rittenhouse. We are coming to you live after the Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) Annual Meeting to talk about how to separate the average management from the great when reading annual shareholder letters.
In Episode 162 You’ll Learn:
Who is Laura Rittenhouse?
- Laura is the author of “Investing Between the Lines: How to Make Smarter Decisions by Decoding CEO Communications” and has been a featured author at the Berkshire Hathaway shareholder meeting. Her annual CEO Candor Surveys report on companies that excel in Candor and those that do not.
Charlie Munger’s Key Identifiers
- You have to be capable of understanding the business.
- The company has to have a long-term durable and withstanding competitive advantage.
- You have to try and find management that has both talent and integrity.
What to Look for in an Annual Shareholder Letter
- It’s all about the culture, try to keep an eye out when great culture shifts and there is a noticeable change.
- Over everything – you have to find companies with little to no BS.
- Warning Signs:
- Watch Out for Cliches – “Our employees are our greatest asset…” or “The future is bright…”.
- Vague or unauthentic writing
- Warning Signs:
- You want a CEO to have humility and to be able to talk about mistakes they have made and learned from.
- Great Examples of Shareholder Letters:
- Jeff Bezos
- John Mackey
- Warren Buffett
- Avoid FOG in a Letter
- Fact deficient
- How do you know when a company has “turned” or the culture has changed?
- Look for CEO succession and how the transition takes place.
- You look for a culture change, look at their personalities, and trust your instincts.
- The greatest CEOs write the greatest letters.
- You should feel like the end of the letter that you just “met” with the CEO.
- You have to have a trustworthy culture or else it doesn’t work.
- It is important for the CEO to self-aware and confident.
- Blog: Where Do We Go After Mark Zuckerberg’s Facebook Hearings And Q1 Earnings Call?
- Laura’s Books
- Charlie Rose on Susan Buffett – Videos