Professor Lawrence A. Cunningham, an authority on corporate governance, corporate culture, and corporate law, shared a dozen hot topics that he will be following and working on in 2016.
1. Shareholder Activism: The Next Generation
This is a subject of ascending importance. I’m especially interested in the activist personalities and target cultures, and in 2015 I commented for a profile of Carl Icahn in the San Jose Mercury News (by Michelle Quinn) and of Nelson Peltz in the Wilmington News Journal (Maureen Milford & Jeff Wordock) as well as the case of DuPont Company on WDEL Radio (Frank Geravce). Expect to see more of the younger generation of activists—even younger than Bill Ackman and with fewer resources—as this approach to governance cements as mainstream. I am directly involved in a few of these efforts, including as a director nominee.
2. Conglomerates: Google the Vanguard
As a cross-current against activism, I foresee continued restoration of the conglomerate business model. In 2015, I endorsed Google’s move in that direction, as noted in stories in
The Omaha World-Herald (
Steve Jordan),
Quartz (
Max Nisen), and
MarketWatch (
Tim Mullaney). I expect to see more conglomerates, even as many shareholder activists oppose them, and predict that the clash will be resolved by switching from a general aversion to gloms to the specific question of the model’s suitability for particular personalities, ownership structures, and corporate cultures.
3. Berkshire’s Culture
I continue to believe that Berkshire corporate culture is special and full of lessons. In 2015, I was grateful to many editorial page editors for printing my op-eds on this theme. These addressed corporate culture and leadership in
The Wall Street Journal (thanks
Mark Lasswell &
Paul Gigot); what’s so instructive about Berkshire in
The Omaha World-Herald (thanks
Deb Shanahan &
Steve Jordan); and numerous aspects of Berkshire and Buffett in the Dealbook of
The New York Times (thanks
Jeff Cane &
Peter Henning, Wayne State U.). More to come in 2016 as the company continues to both evolve and stay the same, as thoughtfully put in various stories in which I’m quoted, including in
Fortune (
Roger Lowenstein) and
Reuters (
Luciana Lopez).
4. Berkshire Beyond Buffett
5. Greenberg and AIG v. United States
During the first half of 2016, the cross-appeals of both sides in Hank Greenberg’s case against the U.S. for its nationalization of AIG should be decided. I am on Greenberg’s side, as I explained in reviewing the lower court’s split ruling in the summer of 2015 in
The National Interest (thanks
Jacob Heilbrrunn) and
the Harvard Corporate Governance blog (thanks
Lucian Bebchuk, Harvard U.). Greenberg and I laid out the basic argument of his case in our 2013 book,
The AIG Story. There may be another book there in the future as well.
6. Popular Contracts
The second edition of my book
, Contracts in the Real World: Stories of Popular Contracts and Why They Matter, will be out in the spring of 2016 (Cambridge U. Press). I include some doozies from 2015, including one featuring Spelman College v. Bill Cosby, which was noted in
The Atlanta Journal Constitution (
Janel Davis). Another fascinating one involves the fight between Perella Weinberg and former partners that
Bloomberg (
Sonali Basak &
Chris Dolmetsch) quoted me about this year. I spotlight celebrities in the “deal-breaking” news when their foibles turn out to be not only entertaining but educational.
7. Quality Investing
My most recent book debuts next week—
Quality Investing: Owning the Best Companies for the Long Term. Written with portfolio managers of London-based AKO Capital, we offer twenty case studies of great companies such as Diageo, Hermès, L’Oréal, and Unilever, to discern the patterns that signify high quality companies. We explain why they are worth paying an investment premium to own. A preview can be found on
Value Walk (
Rupert Hargreaves).
8. Berkshire Annual Letter and Meeting
I’m sure Berkshire’s 2016 letter and meeting will be as memorable as all others I’ve enjoyed over the past 20 years. I look forward to engaging friends on these topics again, which in 2015 included fun appearances with
Betty Liu on
Bloomberg TV and
Liz Claman on
Fox News plus op-eds in
New York Times and
The Omaha World-Herald and joining a panel of 30-plus experts collaborating on the
Wall Street Journal’s annotation of Buffett’s letter (
Preeta Das &
Erik Holm). This year will unveil not only the 20
th anniversary edition of
The Essays of Warren Buffett: Lessons for Corporate America, but also a new annotated transcript of the 1996 symposium where we launched that book. This special publication will be illuminated by such notables as
Bill Ackman (who attended the original symposium) and
Robert Hagstrom.
9. Berkshire Acquisitions
In August 2015, I spent many hours with journalists addressing Berkshire’s $38 billion acquisition of Precision Cast Parts, including at
WaPo,
Bloomberg News, Bloomberg TV, and
Oregon Public Radio. But the far more important acquisition of the year was Berkshire’s $400 million purchase of Detlev Louis—for reasons I explain in the forthcoming issue of
European Business Review in a piece called
Warren Buffett Arrives in Europe: Seeking Quality Companies to Preserve and Protect. My thesis, in short: Berkshire’s future will include a huge concentration of acquisitions across Europe, a mirror image of its past twenty years in the U.S.
10. Berkshire’s Blemishes
Despite achievements, Berkshire is not perfect. I detail the faults and suggest some cures in an article slated for publication in the Spring from Columbia University. This will complement the piece I published in December 2015, with Wake Forest University,
Berkshire’s Disintermediation: A Managerial Model for the Next Generation. The title of the forthcoming piece:
Berkshire’s Blemishes: The Visible Costs of Buffett’s Unique Managerial Model, which I presented it at the Museum of American Finance symposium on Berkshire at Fifty, and which was the subject of thoughtful commentary on these articles in
MarketWatch (by
Elliot Smith). Thesis: a resounding referendum favoring Berkshire accompanied by some vital changes that should be made now or soon to sustain it.
11. Private Equity
For that Museum event, I wrote a piece exploring Buffett’s relationship with Wall Street, including private equity, subtitled “
The Best of Frenimies.” Comparing Berkshire with private equity will be an increasingly hot topic, and has been the subject of my seminar at GW the past two year, as noted in
Value Walk and
Columbia U.’s Blue Sky Blog (thanks
Kate Judge). The seminar and related research are providing the foundation for a book. The tentative thesis? That the future of private equity will draw on lessons from Berkshire Hathaway—and that Berkshire will evolve into a modified form of private equity.
12. Expert Witness Work
During 2015 and into 2016, I served as an expert witness in two major cases, one involving corporate governance issues in the case of Boeing and its Russian co-venturer in the Sea Launch project, and the other an antitrust case alleging conspiracy effectuated through securities disclosures and analyst conference calls. My ability to comment on these at the early stages may be limited but I expect both subjects to be of continuing long-term interest.