The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [232]
Forgetting who actually owned the company was their mistake. Peters now took Munger and Buffett to meet her brothers to secure their votes. By the time the board met again a week later and reaffirmed their position, Peters had made a decision and, behind the scenes, brought her whole family around to voting against the Santa Barbara deal.
“And then my task,” says Peters, “was to go back into that little hermetically sealed Pasadena boardroom and tell all these buttoned-down gentlemen, including the management, that we’re not going forward with the Santa Barbara savings deal.” When she returned to the Spanish-style building, she was thinking about the plaza outside the boardroom windows with its tile-lined fountain. “If the windows had been open,” she says, “they would have thrown me out of them. I knew that what was going on in everyone’s mind was ‘My God, is this what happens when you let a hormonal woman on the board?’”21
Wall Street thought so; it sent Wesco stock nosediving from a high of above $18 to $11 on the news. Wesco’s management was “old and not very aggressive,” one analyst said. Another claimed Santa Barbara was paying too much for Wesco, a “sleeping company for years, with old management.” Another referred to it as “garbage.”22
For her courage, Buffett and Munger now felt indebted to Peters.23 They had also decided they wanted to own Wesco themselves and felt it would be possible to engage Vincenti and win his cooperation. However, by then it must have been apparent that Lou Vincenti would not gambol along behind them like a lamb after its mother. Accordingly, they loosened the purse strings and told their brokers, for once, to bid liberally on the stock. Blue Chip paid $17 for Wesco shares—the price at which they had traded before the deal fell through.
“I will admit we were eccentric,” says Munger. “We deliberately paid more than we had to, but we felt we’d scuttled the damn merger and we didn’t like taking advantage of it by buying at the market price. We thought it was kind of the right thing to do. Well, nobody could understand that. They thought something must have been dishonorable about doing that. We really thought we’d make a better impression on Louie Vincenti if we didn’t scuttle the merger, then buy the stock cheap. That would look pretty God-knows-what, and we wanted Louie to be our partner for the long term. We were trying to behave well.”24
By March 1973, Blue Chip owned a quarter of the Wesco stock. And Buffett, who had never stopped buying Blue Chip, continued his drive to get hold of more. The year before, he had exchanged Diversified’s Thriftimart shares for still more Blue Chip stock. Including the thirteen percent of Blue Chip he owned outright as well as his share of the stock owned by Berkshire and Diversified, which owned another thirty-five percent, Buffett was now effectively the largest Blue Chip shareholder. Blue Chip began to formally tender for Wesco’s shares, this time paying $15 a share in cash, until it owned more than half.25 Within weeks, Munger outlined for Lou Vincenti a vision for the company26 that, not surprisingly, resembled the way Buffett thought about Berkshire Hathaway and Diversified. Wesco, with Munger as chairman, would be another new doll among the rest27—this one residing inside Blue Chip.
Then, no sooner had Blue Chip bought the majority of Wesco than the whole stock market fell apart.28 Buffett’s stake in the Washington Post lost a quarter of its value.29 Ordinarily he would have bought more. However, he had promised Graham that he wouldn’t. Instead, he recommended it to his friends.30
So instead of buying more Post stock, Buffett—who had always believed in concentration—looked for new opportunities and began filling