Buffett unveils succession plan

OMAHA, Nebraska, AP

Investors will be able to react immediately Friday to the latest wrinkle in legendary investor Warren Buffett’s succession plan, instead of having to wait through the rest of a weekend as in years past. Buffett’s holding company, Berkshire Hathaway Inc., usually releases its annual report on a Saturday in March to allow plenty of time to sift through the figures and commentary before trading resumes. But a new Securities and Exchange Commission deadline thwarted that this year. Buffett said in his letter to shareholders Thursday that he plans to hire at least one young investment manager to help succeed him. Some investors will likely continue to be satisfied with Buffett’s explanation of the succession plan, but others will certainly want more details about who will replace the 76-year-old chief executive. Morningstar analyst Justin Fuller said shareholders should be glad Buffett is thinking about a successor at the company that Buffett built from a 1956 partnership of four relatives and three close friends. Berkshire has total assets of US$248.4 billion (euro187.8 billion). “I think the fact that he’s thinking about it and he’s doing something about it should certainly be comforting to investors,” Fuller said. To replace Buffett, Berkshire plans to split his job into two parts — chief executive officer and chief investment officer. The company’s board of directors approved a plan in October to hire one or more candidates for the job of CIO, so Berkshire will be ready when Buffett can no longer work. Buffett said last year that Berkshire’s board had three outstanding internal candidates for chief executive, and the board knows “who should take over if I should die tonight.” Each of those candidates is significantly younger then the 76-year-old Buffett. But the “Oracle of Omaha” said this year that Berkshire is not as well-prepared for a successor on the investment side of the business. He said those who might replace him on the investment side are too close to his own age to do it for very long. Lou Simpson, 70, who manages Geico’s investment portfolio, would “fill in magnificently for a short period,” Buffett said. Whoever Berkshire hires as an investment manager may be able to help put the company’s US$38.3 billion (euro28.96 billion) cash to work. The amount of cash the company held at the end of the year is down slightly from the US$42.25 billion (euro31.95 billion) it held at the end of the third quarter.