Warren Buffett’s Successor is…Todd Combs?
Quick Facts:
- Berkshire Hathaway (NYSE: BRK-A) has a market capitalization of roughly $203.7 Billion as of today’s closing price
- Berkshire Hathaway’s subsidiary companies include: GEICO Auto Insurance, Fruit of the Loom, and See’s Candies
- Berkshire Hathaway was originally a textile manufacturing company
- Todd Combs is a financial executive running Castle Point Capital, a small hedge fund in Greenwich, Connecticut
Warren Buffett’s successor has been discussed for quite some time by the media. And the name that has been speculated as being at the top of the list is Todd Combs who runs a small hedge fund of about $400 million. That’s not a small number but if you consider the size of Berkshire Hathaway’s business, Todd Combs will be up for a huge challenge.
Warren Buffett has clearly said that he doesn’t have any plans to step down immediately. However, having turned 80 this year it’s a question that has to be asked. There have been quite a few named to be possible successors, some have passed on the job only because it potentially won’t pay well. Warren Buffett’s annual salary from his job as Chariman and CEO is $100,000. While his successor will definitely make more, many people that will take his job could potentially earn billions of dollars in their lives managing hedge funds.
On top of all the pressure of managing quite a sum, the eventual successor will be compared endlessly against one of the greatest, if not the greatest, investors of all time. Once the company is passed on to this new successor’s management, the stock price will most likely fall at least for the time being. Warren Buffett and Charlie Munger have built a great company and their $120,000+ per share price isn’t inflated like some other companies. The intrinsic value of Berkshire Hathaway alone makes the company worth investing and having Warren Buffet and Charlie Munger in charge make the investment that much more appealing.
But businesses and economies will change and thus adjustments will be needed. The successor to Buffett will need to have the vision to keep the company going. Just keeping the current portfolio of companies that has over 250,000 employees in total will be a challenge but as the company grows with funds to manage, it will also be a challenge to continuously find lucrative companies to invest in. Whoever does end up running Berkshire will be up for a massive challenge and it’ll be interesting to watch.
One thing is for sure, the annual shareholder meeting that’s treated something like a concert won’t be as fun when Warren Buffett isn’t there.
Warren Buffett photo by sirenmedia on Flickr.
