Sayonara, Pilks — we’re short of owners with their hearts in the business

A sprig of the Pilkington family was saying goodbye to his hosts. ‘I’ve an early start,’ he explained. ‘I’ve got to be at the bloody glassworks in the morning.’ When he arrived, he found that the chairman, Sir Harry Pilkington, was there before him and had left a note on his desk: ‘My boy, it seems to me that your heart is not in the business…’. Family businesses need enough sprigs to allow for such pruning, and this one was a model. Then some stray aunts and cousins wanted a price for their shares. Now Pilkington is just another public company, and in Sir Harry’s place sits Sir Nigel Rudd, a serial non-executive chairman, Pilks is on the receiving end of a bid from Nippon Glass, and Sir Nigel’s board is recommending it. Nippon is half Pilks’ size and seems to have troubles of its own, but the bid is in cash, and so long as the cheque goes through the Sumitomo Bank and out again, Pilks’ shareholders will not worry. They have been calling the shots to Sir Nigel. Few of them will be owners in the sense that the family were. They are investment managers struggling to show superior performance on behalf of life funds, pension funds and, of course, nowadays, hedge funds. For them, the Pilks deal will make this quarter’s performance look good. Another day, another dollar. Their heart was never in Pilkington’s business.

Rank outsiders

Their customers ought to ask, all the same, why the world’s most respected investor thinks differently. Warren Buffett — now close to anointing his successor — has made his own and his followers’ fortunes by buying shares in good companies and hanging on to them. In this way he comes to know and understand them. Both sides benefit. Our own managerial shareholders are frightened of knowing too much and becoming insiders, which would debar them from selling their shares when they wanted to.