Lawrence Cunningham podcast: studying Warren Buffett’s advantage, the hidden risks of index funds and how to write better

Professor Lawrence Cunningham is the author of one of the most popular Warren Buffett books of all time, The Essays of Warren Buffett; sits on the board of Constellation Software (CSU), is the pioneer of the quality shareholders movement, an advocate of proper corporate governance, and is a tremendous writer and educator.

Professor Lawrence Cunningham sat down with Owen Rask during an Australian trip, around the time of his book launch for Margin of Trust.

Lawrence Cunningham podcast talking points

Lawrence Cunningham’s favourite city in Australia? (Don’t worry Sydney, it’s only a joke)

Rapid questions

• Who is the most unassuming investor you have met?
• What’s one thing you do to write more effectively that others do not?
• Imagine you are 18 again and your only dream is to become a professional investor. Which one of these degrees would you choose to study and why: Arts, Engineering, Law or Commerce?

To add context to any conversation with Lawrence Cunningham I know I need to ask you about quality shareholders and your involvement with Warren Buffett. However, I want to spend a moment understanding something about you, if you don’t mind. I read somewhere that you worked to put yourself through school. As someone who does not come from a family with any academic record, very little investing knowledge and very much a pragmatic entrepreneurial background (small family businesses only, it was a struggle), I am very keen to understand how you became interested in business and the corporate world? Did it strike you early in life?

How did you come to so keenly follow Warren and/or Berkshire? What was it that first captivated you?

If I’m not mistaken it was Warren who impressed upon you the idea of high-quality shareholders? Can you describe the lineage of research that ultimately concluded with books, articles and international acclaim for the quality shareholders movement you pursued? In other words, ‘how did we get here’?

The hidden risks of index funds: corporate governance?

For companies, I’ve heard you say that, “the best stock is one that’s fairly priced?” Can you elaborate on this and, if you have it off-hand, I’m especially keen to understand a quantifiable outcome of attracting high-quality shareholders?

Are you, Professor Cunningham, concerned about the rise of passive/index fund investing from a quality shareholder perspective? Perhaps you can elaborate on how the likes of Vanguard, Blackrock and State Street make corporate governance decisions right now?

If you can think about some the highest quality investors or management you have met, what are some of the common or, better still, uncommon traits they exhibit?

Warren Buffett’s two competitive advantages, according to Professor Cunningham

Previously, I heard you talk at length about some of Warren’s key competitive advantages, as an individual, is absorption and disciplined rationality. I’m hoping you could take a few moments to briefly elaborate on that, perhaps with 1 or 2 practical examples?

What happens to Berkshire’s key personnel and the organisational structure, and the share register, when Warren is no longer at the helm?

Finally, what do you believe about investing, finance or business that few people agree with you on?

About Lawrence Cunningham

Lawrence A. Cunningham is an authority on corporate governance, corporate culture, and corporate law and advises public companies and boards of directors in those areas as Senior Counsel at Mayer Brown in New York and advises managers and shareholders on investor relations as Managing Partner of the Quality Shareholders Group.

Professor Cunningham has written dozens of books and scores of articles on a wide range of subjects in law and business. These include best-selling books such as The Essays of Warren Buffett (in collaboration with Warren Buffett) and The AIG Story (written with Hank Greenberg) and influential research articles on accounting and corporate governance. Before retiring from GW in 2022 at age 60, Cunningham founded and for many years directed GWNY, GW Law’s innovative boot camp for aspiring Wall Street lawyers.

Professor Cunningham has served on several public company boards, including currently as vice chairman of Constellation Software Inc. (Toronto Stock Exchange), owner and operator of nearly one-thousand vertical market software businesses, and Kelly Partners Group (Australian Stock Exchange), owner and operator of nearly one hundred independent accountancy firms.

Before becoming a professor, Cunningham practiced corporate law with Cravath, Swaine & Moore in New York from 1988 to 1994, where his practice areas included corporate governance, M&A, finance, and international. In 2018, Professor Cunningham received the B. Kenneth West Lifetime Achievement Award from the National Association of Corporate Directors (NACD).