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Thursday, March 31, 2011

What is The Future of Berkshire Hathaway?

Berkshire Hathaway (NYSE: BRK.B) executive David Sokol quit the conglomerate. There were questions about his trading of shares in Lubrizol before Warren Buffett, Berkshire’s chief, decided to buy the firm. Conveniently, both men said that Sokol had tried to resign before and miraculously Buffett had decided to move toward retirement again recently.



A great deal has been made of the fact that Sokol might take over as head of Berkshire one day. He was one of a list of “Buffett replacements” that the press identifies from time to time.



Investment manager Todd Combs joined Berkshire last year and become a new candidate to run the company, at least in the eyes of the press. China investor Li Lu has been tagged as a candidate. And, Berkshire has a number of large operating companies with stellar CEOs. The head of Burlington Northern, Matthew K. Rose, a railroad Berkshire bought recently, is also described as being worthy of consideration.



Berkshire’s board also has at least one member who could become CEO–Steve Burke, the COO of Comcast and head of the NBCU unit the cable company controls.



Buffett has revealed very little about who might replace him or whether the new management might be a group–a sort of Office of the CEO.



The most important aspect of any debate over who might take Buffett’s job is that Berkshire is a very different company than it was three years ago. It owns more operating companies. Buffett’s prowess as an investor has become less important to the company’s fortunes, and no one could be expected to duplicate his investments returns which date back to the 1960s.



There are more people to replace Buffett than most observers of Berkshire will admit. And, the old man could live another 20 years.


by
D, McIntyre
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