One recurring theme in Buffett’s writings is the importance of good managers. He’s not shy about slating major CEOs he doesn’t think are good enough. And good managers are a requirement for any business he invests in, particularly if he’s acquiring the company outright.

How does Buffett find good company managers?

Buffett wants a manager with the mindset of an owner. He needs them to be looking out for shareholders, not themselves, and to think with long-term horizons. When he acquires a company, the managers are told to treat the company as if it’s their only asset, one that they have to hold onto for a hundred years.

Buffett looks for signals that indicate managerial qualities. If a company’s accounting is somewhat suspect or overly complicated, that’s a bad sign.

"When managements take the low road in aspects that are visible, it is likely they are following a similar path behind the scenes."

– Warren Buffett

The same goes for a manager’s public statements: Buffett values clear and candid discussion of a company over insubstantial corporate jargon. He thinks it indicates trustworthiness:

"Unintelligible footnotes usually indicate untrustworthy management. If you can’t understand a footnote or other managerial explanation, it’s usually because the CEO doesn’t want you to."

– Warren Buffett

His managers should be realistic in their goals for the company, too. He thinks CEOs shouldn’t predict growth rates, and he suspects those that regularly boast about their earnings success. It’s very hard to achieve consistent high growth and companies that claim to be achieving it may be hurting parts of their business to hit ambitious targets.

"Managers that always promise to 'make the numbers' will at some point be tempted to make up the numbers."

– Warren Buffett

Finally, he demands managers avoid the “institutional imperative”: the disease afflicting big companies that makes them averse to change and wasteful with money. This can be a death knell for firms, so managers that sustain a culture opposed to this are a good bet.

Ultimately, Buffett goes into business “only with people whom I like, trust, and admire.” He may have a leg-up over you seeing as he actually meets CEOs he invests with. But you can make a stab at the same thing: many CEOs have a public profile and you can read their statements and interviews to get a feel for the person holding your money.