Will Strong Get His Payoff?
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Friday, December 10, 2004

Will Strong Get His Payoff?

Did Strong mutual fund shareholders take the Oracle of Omaha's suggestion when casting their proxies this week about whether to join the Wells Fargo family?

Strong's shareholders, who were solicited by proxy firm D.F. King to approve the sale of the money manager to Wells Fargo, met today to give their yays or nays to the deal, which was reported by the 401kWire in late May.

If they took Warren Buffett's pithy recommendation, founder Richard Strong won't see a dime. In 2003 letter to shareholders, Buffett had a suggestion for the directors of a certain "miscreant management company" up for sale, but it's just as well applied to fund shareholders: "Why in the world donít the directors of those funds simply select whomever they think is best among the bidding organizations and sign up with that party directly? The winner would consequently be spared a huge "payoff" to the former manager who, having flouted the principles of stewardship, deserves not a dime."

Buffett continued: "Not having to bear that acquisition cost, the winner could surely manage the funds in question for a far lower ongoing fee than would otherwise have."

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