Abstract

Berkshire Hathaway, among history’s largest and most successful corporations, shuns middlemen; its chairman, the legendary investor Warren Buffett, excoriates financial intermediaries. The acquisitive conglomerate rarely borrows money, retains brokers, or hires consultants. Its governance is lean, using an advisory board and bucking all forms of corporate bureaucracy. Berkshire’s shareholders also minimize the roles of intermediaries like stockbrokers and stock exchanges by trading little and holding for lengthy periods.

By exploring Berkshire’s antipathy to intermediation, this article supports the view that public policy ought to make considerable room for companies to define their own internal business practices and that more companies ought to consider emulating aspects of Berkshire’s disintermediation. While Buffett’s legacy to date has been to lead two generations of value investors, Berkshire’s radically ingenious disintermediation has the potential to shape the next two generations of value managers, as argued in this paper and at greater length in the author’s recent book, Berkshire Beyond Buffett: The Enduring Value of Values.