Berkshire’s repellent shareholders

By Felix Salmon
December 23, 2009
here. It's another pilgrimage-to-Omaha story, but this one has a twist: Schwartz finds that Buffett's folksy wisdom really isn't the slightest bit contagious.

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Warren Buffett probably won’t be particularly happy with Mattathias Schwartz’s cover story in the latest Harper’s, behind a subscription firewall here. It’s another pilgrimage-to-Omaha story, but this one has a twist: Schwartz finds that Buffett’s folksy wisdom really isn’t the slightest bit contagious.

Among the pilgrims are RJ Meurer Jr, a senior vice president at Morgan Stanley who storms into Buffett’s barber with his entourage, telling the Brazilian man getting a shave that “You got to get out. We got this barbershop booked.” Or there’s Matt Kelley, a Chicago public-school teacher, who failed at trading in and out of a single Berkshire B share at the same time as conspiring to lose $200,000 of his $150,000 net worth trading on margin; he eventually maxed out his credit card to continue to make leveraged bets.

But Schwartz saves the worst for last, when he finds Talia Eisenberg, along with her father’s girlfriend, getting thrown out of an Omaha bar for being drunk. Talia is the daughter of Robert Eisenberg, who himself is the son of an early investor in Berkshire. With her unearned riches she has opened an art gallery on the Lower East Side; she also receives glowing press from NYC society blogs, complete with comments extolling “her generous heart”.

She’s not going to be happy about this:

“Do you even know who we are?” Talia asked. She thrust her hand into her purse. Out came a grip of shareholder credentials.

“I don’t care,” said the manager. “You’re getting out of this restaurant. Now.”

The women strutted out to a black Mercedes-Benz. As Talia drove, she enumerated a few of her present frustrations. She hated the tacky nowhereness of Omaha. She hated the gawking shareholders who think they own it for a weekend. Most of all, she hated Gorat’s for unjustly ejecting her from the premises. “They thought I was a whore because I’m good-looking and rich!” she exclaimed. “What can I do?”

“They never see the likes of us around Omaha,” replied Tanya.

“We have more shares than all those fuckers,” Talia said…

“Where were you at the cocktail events?” Talia asked me. “We were there with all the ballers. The real deal. You didn’t go to Borsheim’s, did you? That’s where all the suckers go, with one baby B share. The big parties are up at the houses.”

This is what happens to the millions of dollars that Buffett earns for his earliest and most loyal investors: they end up fueling the very snobbery and condescension that Buffett himself could never abide.

Talia’s young, and she was drunk (and she was driving drunk, to boot), but maybe it’s only the young and drunk shareholders who will ever come out and say — to a journalist, no less — what most of the people “up at the houses” are thinking.

All of which only confirms me in my view that once Buffett has gone, Berkshire Hathaway will not remain long in its present form. Look at its owners, ex Buffett and Munger, and you see people who simply don’t have the constitution to patiently make careful, idiosyncratic, multi-billion-dollar bets with century-long time horizons. The ghost of Buffett might hang around for a while, but eventually the new CEO will start talking about “shareholder value”, and that will be the end of that. Not that it’ll make any real difference either way to the likes of Talia Eisenberg.

16 comments

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About the barbershop. Obama told those thugs that he was the only person standing between them and the pitchforks. Obama wasn’t in that shop. They really ought to behave. It wouldn’t have gone so smoothly here in Miami.

Posted by svendthrift | Report as abusive

Reading on inherited, unearned wealth reminds me yet again of why a hefty estate tax is one of the most just out there… and why aren’t we taxing capital gains at the same rate as income?

Posted by expatsp | Report as abusive

this explains the railroad acquisition a bit. it locks the company into what it is for a bit longer, as there is now a lot less cash on the books. i would guess they will set a precedent for cash dividend pretty soon.

Posted by q_is_too_short | Report as abusive

Good post, Felix. I wonder what Buffett does think about the lucky few who have clung to his coattails and ridden to fabulous wealth, doing very little along the way.

Posted by jdanielwright | Report as abusive

svendthrift..you read the article above? Or did you just stumble in here from the bar. The article is about Warren Buffett, Berkshire and Omaha, Nebraska. Obama is not mentioned or have anything to do with this story.

Posted by justanotherjoe | Report as abusive

expatsp..were aren’t taxing capital gains at the same rate as income, because those of us with “just” income don’t contribute the big bucks to politicians like the “capital gain” Wall Street crowd does. The office help probably pays a higher percentage of taxes than those millionaires do.

Posted by justanotherjoe | Report as abusive

The same thing has happened to Oprah Winfrey and to many others who earned a great deal of money. The family, friends and close associates became greedy, hardened to the plight of others.

The only money appreciated is the money earned by our own honest, hard work.

Posted by dadgum | Report as abusive

I’ve known Talia Eisenberg since she was in high school here in Omaha. Her portrayal as a spoiled brat with an undeserved sense of entitlement is, if anything, understated in the aforementioned article. Unfortunately, she has a younger brother who makes her look like Miss Manners. The attitudes of both these young snots has been cultivated at home.

The conduct of those like Ms. Eisenberg provide ample support for Mr. Buffett’s argument that inherited wealth is a bad idea. It’d be nice to see what the lives of the Eisenberg heirs would be like if they actually had to survive on their natural talent or intelligence.

Posted by omahawriter | Report as abusive

Egads…Talia is not good looking. Are people like this what one often hears as the most productive people in society because of their wealth?

Posted by whodat | Report as abusive

This is reminiscent of to articles in the SF Chronicle, though not on the same day. One related the birthday party for Gordon Getty, with flower garlands, caviar tables and and ice bar etc at a cost of roughly $500,000.
Then a few days later there is a long story about a Chines family of 3 living in “One room occupancy” “apartments, and his father living in an 8×10 ft “apartment. – Of course, with in line with the month, the is the “Season of Sharing” charitable appeal and depiction of people in need.
A more blatant reporting of the spreading inequality in America is hard to find. But then, the Chron has to appeal to the SF “elite”, showing their photos and publicizing the debutante ball.
But nary an article on the inequality.

Posted by gunste | Report as abusive

With regard to above comments concerning the Berkshire shareholder’s daughter they are at least partly incorrect particularly with regard to her father. As a one-time Omahan I cannot speak for the mother, not knowing her. The father is the total opposite of the country club “snotty” type. He is low key, non-materialistic and definitely not as the article states the product of inherited wealth. His parents at the time of the early partnership years were new immigrants without the means to invest. As for Berkshire, he invested himself. Also, generally speaking, the article was mean-spirited as a whole.

Posted by Norni | Report as abusive

I had the extreme misfortune of working with Talia Eisenberg (and eventually suing her for unpaid wages). While I worked incredibly hard to run her business and support myself in grad school, Talia jetted around the world to various resorts and sent intermittent nasty and ludicrous emails. Ultimately, she decided to accuse me of taking advantage of her and refused to pay me. Inherited wealth is a curse — it breeds monsters.

Posted by nyny | Report as abusive

Talia Eisenberg and her father and “Tanya” and David Clark-Omaha lawyer and “co-author” of the Buffetology bookpile, are three birds of a feather here in little ol’ omaha. One inherits, one waits to inherit, one gets next to inheritance, and one,Clark-pimps Buffett’s history in a series books and claims to have ‘managed money for the Buffett family’(NOT!). Probably not as bad as the hideous rich found at the ‘ country clubs’, or the ‘ballers’(one wonders what they do with their A-Shares since those Baby B shares jus don’t make it) just strange, phony and sad.

Posted by A.Share | Report as abusive

Maybe right about some of the above but Talia’s father did NOT inherit the vast proportion of his BRK shares. He purchased them well after the death of his father after a windfall he created as a result of the historic move in silver prices. Call him lucky, but he is not as characterized. Other than that, I leave the rest to the reader of the article’s opinion.

Posted by dodgestreet | Report as abusive

The story above regarding ungrateful shareholders is interesting and informative but meanspirited. It does not reflect the majority of shareholders. To reiterate the above comments, Talia’s father invested in Berkshire by himself long after his own father had died. This was decades after Mr. Buffett’s mega-successful partnership was created when Berkshire was still under 1000 a share.

Posted by dodgestreet | Report as abusive

Eisenberg did not inherit his stock. He purchased it himself.

Posted by dodgestreet | Report as abusive