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In the past two years, the top finisher in Barron's annual survey of the world's most respected companies was a venerable 19th-century business that solemnly had passed on management responsibility over many generations, each one steeped in the belief that the company and its culture were larger than any single leader.
This year, the survey's third, America's money managers effectively honored not a century-old management tradition or an iconic brand, but one man's extraordinary life's work.
Berkshire Hathaway (BRK.A, news, msgs), a one-time New England cotton-mill operator that Warren Buffett transformed over 40 years into a multifaceted $185 billion colossus, has succeeded last year's winner, Johnson & Johnson (JNJ, news, msgs), and 2005's first-place finisher, General Electric (GE, news, msgs), as the most respected company in the world.
It is appropriate that Buffett, known principally for his capital-allocation genius, should be held in highest esteem in the Barron's survey, the only ranking of corporate reputation based exclusively on the views of professional investors. These investors' comments about Berkshire were unanimously reverential, their tone suggesting such reverence should be obvious to all.
"C'mon, it's Berkshire," wrote one money manager.
"Clearest-thinking investor of our time -- Warren Buffett," wrote another.
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As if to emphasize Buffett's primary place in investors' minds, the four mega-cap stocks in which Berkshire holds a significant long-term position -- Procter & Gamble (PG, news, msgs), Coca-Cola (KO, news, msgs), Wells Fargo (WFC, news, msgs) and American Express (AXP, news, msgs) -- all placed highly in this year's rankings, between Nos. 4 and 17.
Steady but aggressive
Berkshire climbed to the top spot from fifth place in 2006, after another year in which Buffett's mixture of vision, patience, boldness and modesty were on clear display. Buffett's longtime unease about the vulnerability of the U.S. dollar and the risks of financial derivatives proved more than prescient in light of this year's turmoil in the subprime mortgage market and the financial markets generally.While he continues to sit on tens of billions of dollars in cash, Buffett also has invested aggressively in shares of Burlington Northern Santa Fe (BNI, news, msgs), with the stated intention of acquiring up to 25% of the big railroad. After several years spent moving sideways, Berkshire's Class A shares have come to life, rising 25% in the past year to $119,300, mightily outperforming the Standard & Poor's 500 Index ($INX).
It couldn't have hurt Berkshire's reputation, either, that Buffett pledged the bulk of his fortune, close to $40 billion, to charity in the past year, through the vehicle of the Bill & Melinda Gates Foundation.
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As in the past two years, the World's Most Respected Companies survey sought investors' opinions of only the 100 largest companies in the world, based on stock-market capitalization. Beta Research of Syosset, N.Y., helped Barron's conduct the survey, which elicited responses from 95 professional investors across the country, ranging from proprietors of small investment-advisory firms to the chief investment officers of giant money-management firms overseeing hundreds of billions of dollars.
Survey participants were asked to select one of four statements for each company: "highly respect," "respect," "respect somewhat" and "don't respect." A point value was assigned to each response, with the heaviest weighting accorded "highly respect." A mean score was tabulated for each. In the case of identical means, the higher ranking went to the company with the most "highly respect" votes.
Continued: Top 5 names the same
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