Chapter 30. Large Shareholders: They Are Your Friends

Warren Buffett owns 26.91% of the shares in Berkshire Hathaway.

Berkshire Hathaway Proxy Statement, 2009

Warren Buffett is the largest Berkshire Hathaway shareholder and effectively controls the company. Similarly, Wal-Mart is controlled by the Walton family, Charles Schwab Inc. is controlled by Charles Schwab, America Online (AOL) was controlled by Steve Case for a long time, Starbucks is controlled by Howard Schultz, is controlled by Jeffrey Bezos, Oracle is controlled by Larry Ellison, and Dell is controlled by Michael Dell. All these companies performed very well for 10 to 20 years or longer.

Founder Control Matters

While you may have missed joining the successful entrepreneurs just listed, plenty of others are likely to come to your attention if you keep looking for them. As an investor, you should investigate family-controlled or individually controlled companies for potential investment—they are usually well-managed and friendly to shareholders, especially when the founding CEO is still in charge. In a well-known study, Ron Anderson of American University and David Reeb of Temple University show that, among all firms in the S&P 500, family firms perform better than nonfamily firms.[224] Additional research shows that when the founder CEO is in charge, performance is even better. Why might this be the case?

Although Buffett did not establish Berkshire Hathaway, he has been a director since 1965 and its chairman of ...

Get Buffett Beyond Value: Why Warren Buffett Looks to Growth and Management When Investing now with the O’Reilly learning platform.

O’Reilly members experience live online training, plus books, videos, and digital content from nearly 200 publishers.