3 recent Investing lessons from Warren Buffett

Over the past weekend, the octogenarian and nonagenarian, Warren Buffett and Charlie Munger, held court in Century Link in the town of Omaha, Nebraska in the U.S.A. The two investors – who are chairman and vice-chairman, respectively, of American conglomerate Berkshire Hathaway had held their company's annual shareholder meeting there. Close to 40,000 people had turned up for the event this year and I was one of them. With an earlier promise to bring to readers of The Motley Fool Singapore some insights I had from that great gathering (see here and here for some of my previous thoughts), here are three timeless lessons from the meeting from Buffett and his venerable sidekick, Munger. Look for unique business assets During the meeting, Buffett and Munger were asked by a shareholder on how they had managed to gain the trust of the various businesses they were looking to acquire back then when they did not have the golden reputation which they enjoy now. Buffett's response was simple and to the point: "We have kept our word." He added that even though Berkshire can't promise that it would never fire anyone or sell the business it's acquiring, it is able to promise that it won't sell unless the business wound up making losses chronically or if there are huge labour issues. Over the decades, Buffett and Munger have kept to their word. Today, Berkshire has become one of the first – if not amongst the top few – choices for current owners of great businesses who care deeply about the future of their businesses even though they want to sell out. That's a great competitive advantage that Berkshire has over other business acquirers like private equity funds, who generally handle acquired-businesses with less of a 'human touch'.  Such a "unique asset", as Buffett calls it, can't be gleaned from financial statements and is a great reminder for investors that sometimes, the hard figures – as important as they are – can't always tell us what makes a company great. In the local context, it's not hard to imagine how a healthcare operator like Raffles Medical Group (SGX: R01) might be able to benefit from 'off-financial-statement-assets' such as having a great brand cache amongst both local and foreign patients who are looking for quality healthcare. Read more…