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Buffet Says Successor Identified, But Not Revealed


The successor to Warren Buffett at Berkshire Hathaway Inc. (BRKA, BRKB) continues to be shrouded in mystery, with the billionaire investor giving nothing away. Nevertheless, Buffett said the company's board has identified a successor.

In an annual note to Berkshire Hathaway shareholders on Saturday, Buffett said the board has identified an individual to succeed him as CEO. The only information Buffett gave was that the person was for a long time seen as a potential candidate by the board. The incumbent would be from one of heads of Berkshire's operating companies.

Berkshire shareholders over the years have been perplexed as to who will replace Buffett. The issue became more intense last year after David Sokol, a top executive and who was seen as a likely candidate, resigned following allegations of questionable stock purchases in a company that Berkshire bought.

Investors see one among the three Berkshire executives as the possible successor to Buffett, namely, Ajit Jain, Berkshire's reinsurance head; Matt Rose, the head of the company's railroad operation; and Gregory Abel, the head of Berkshire's MidAmerican Energy.

Other candidates who might make it to the top position include Tony Nicely, who heads Geico Corp., a Berkshire-owned firm, and Tad Montross of Berkshire's General Re unit.

Jain is credited with having built the reinsurance virtually from scratch, and has been immensely applauded by Buffett in the past.

Rose came into the limelight about a year ago, some time after Berkshire completed the acquisition of Burlington Northern Santa Fe railroad. Abel is seen as part of a core team running MedAmerican Energy.

Nicely is reputed for his having built Berkshire's Geico property-insurance unit into one of the nation's largest car insurers, while Montross came in for praise this year for his work at General Re.

Buffett has promised a "seamless leadership transition" and said his good health will enable to him to continue at the helm for now.

In the about past year, Buffett has hired two investment managers, Todd Combs and Ted Weschler, who will one day manage the entire spectrum of Berkshire investments - which now includes over $100 billion in stocks, bonds and other securities, though Buffett currently oversees most of the portfolios.

Listing his major investments in 2011, Buffett cited the $5 billion investment in Bank of America Corp. preferred stock, which he said will be of great value before they expire in 2021. He also flaunted the company's $10.9 billion pouring into International Business Machines Corp. as another instance of sane investment decision.

Buffett said his poor decisions include a $2 billion bonds purchase from a Texas power producer that went private in a leveraged buyout in 2007. Buffett has written down the investment by $1.4 billion in the company, now known as Energy Future Holdings.

Buffett said he still has a gargantuan appetite for large business acquisitions, with the company sitting on cash of about $37 billion at the end of 2011.

On Saturday, Berkshire reported net income of $10.3 billion for 2011, down 21 percent from a year ago, as huge payments arising from natural disasters offset higher earnings from other Berkshire businesses.

Berkshire, a $200 billion conglomerate, has been run by Buffett for nearly five decades. Buffett owns more than $40 billion of stock in Berkshire, which has investments in diverse areas including railroads, insurance, and retail.

BRKA is trading at $120,320.00, up $320.00 or 0.27%, on the NYSE, while BRKB is up $0.24 or 0.30%, trading at $80.28.

by RTTNews Staff Writer

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