Variable value

Berkshire owner's departure dims Buffett mystique

Warren Buffett's mystique just faded a little bit more. Value investor David Winters sold his shares in Berkshire Hathaway over a clash about Coca-Cola's pay practices. The rare backlash follows other Oracle of Omaha letdowns, which are undermining his legacy and also maybe Berkshire's.

Winters, who runs the $1.7-billion Wintergreen Fund, said he sold his $151-million stake in Berkshire class-B shares because he "no longer felt that Warren Buffett was looking out for his shareholders' interests." Winters first gained attention earlier this year for vocally protesting Coke's outsized equity compensation plan. Buffett, who owns nine per cent of the company and whose son sits on the board, abstained from the vote even though he said subsequently that he had disagreed with Coke's proposal.

It was only the latest episode in recent years to chip away at the billionaire's sage but folksy investment persona. Buffett went soft on onetime protege David Sokol for his controversial share dealings. After sharply criticising the debt-powered private equity method, Buffett all but modeled his $28-billion buyout of Heinz, with Brazilian partners, on it. Some smaller acquisitions, including of community newspapers, have been rooted more in nostalgia than value.

Berkshire's class-A shares recently surpassed the $200,000 price for the first time. But the company's growth in book value per share, Buffett's preferred performance gauge, has lagged the total return of the broader S&P 500 Index in four of the last five years, after falling short only six times in the previous 44 years.

Succession remains something of an enigma at Berkshire Hathaway as does the sustainability of the conglomerate after 83-year-old Buffett is gone. The vote of no confidence by Winters, who at least in some ways has built a firm based on principles advanced by Buffett, and developed by Benjamin Graham before him, suggests the disillusion is spreading.