In recent months and even years, the investing public has paid close attention to the legal exposures facing Bayer and Johnson & Johnson. Bayer acquired Monsanto, which manufactured Roundup, and American juries across the country are determining that Roundup causes injury. Similarly, Johnson & Johnson’s talcum baby powder has been increasingly determined to contain asbestos, and therefore, a causal link to the most asbestos cancer, mesothelioma.
With far less fanfare, Colgate-Palmolive has also found itself involved in talcum powder litigation because it sold Cashmere Bouquet (talcum) powder from 1871 until 1985. It is now involved in similar litigation to Johnson & Johnson, with the company disclosing the following on page 18 of the 2018 Colgate-Palmolive annual report:
“The Company has been named as a defendant in civil actions alleging that certain talcum powder products that were sold prior to 1996 were contaminated with asbestos. Most of these actions involve
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Out of all the acquisitions that Buffett and Munger made together, the acquisition of See’s Candies in January of 1972 might be the most important, not necessarily because it was the greatest source of future wealth for the two of them, but because of the way it shaded their approach to investing.
In the late 1960s and early 1970s, Warren Buffett focused his investing on windmills, textile mills, dying department stores, and pump factories. These were dying businesses, but they followed the Graham school of thought that you can buy something so cheap before book value that you would be guaranteed a profit if you chose to liquidate the business and you’d have a good chance of doing extraordinary well even if the business showed modest improvement. If Bart had to go to the chalkboard and describe Warren Buffett’s investing style before the See’s Candies purchase, he would write, “Buy … Read the rest of this article!
Since at least 1993, but possibly earlier, Warren Buffett has only collected $100,000 annually to serve as CEO of Berkshire Hathaway. There are good reasons for this, as it bolsters his social and political capital (i.e. he has more perceived moral authority to lecture corporate America on restraining their animal impulses when he’s collecting $100k rather than $100m annually as compensation). There are also economic reasons for this arrangement, as Buffett has owned between 17% and 36% of Berkshire Hathaway stock during this time, and there would be a certain inefficiency in paying himself from an asset where he owns a sizable stake (of course, he would still be more absolutely richer if he had taken such compensation).
Even though there are important reasons why Buffett behaved the way he has regarding his personal compensation, it also remains true that he could have fairly demanded annual compensation of $100 million … Read the rest of this article!