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Sunday, February 26, 2012

Berkshire Hathaway Has Successor Lined Up, Buffett Says

Berkshire Hathaway says its fourth-quarter net earnings fell 30 percent as the paper value of it’s acquire contracts fell, but most of its subsidiaries performed well or bring to successful conclusion.

Billionaire Warren Buffett a person who has assets worth a billion or more dollars that’s want is a desire or need Berkshire Hathaway shareholders to know that the company has someone in mind to replace him eventually, but he's focus attention on that he has no plans to leave.
Buffett offered a couple new details about Berkshire's succession planning in his annual shareholder letter Saturday. Investors have long worried about who will replace Berkshire's 81-year-old CEO.

Berkshire reported fourth-quarter net income of $3.05 billion, or $1,846 per Class A share. That’s down from $4.4 billion net income, or $2,656 per share, a year ago.
Berkshire’s profit fell short of the $1,875 per share that the four analysts surveyed by FactSet were expecting.
The biggest difference was the change in estimated value of Berkshire’s investments and derivative contracts. That fell to $382 million this year from last year’s $1.4 billion.
Berkshire’s quarterly revenue grew 5 percent to $37.96 billion from last year’s $36.17 billion.

While the world knows about the sensational investing record of Warren Buffett over his legendary career, how are the changes at Berkshire Hathaway  performing since being implemented? The succession plan at Berkshire is among the most high-profile in modern American corporate history. 

Mr. Buffett, who turned 80 in August, has said he will likely split his job in two, separate CEO and investing functions. His first step was hiring Todd Combs, manager of a small hedge fund from Connecticut, to oversee a portion of Berkshire's roughly $100 billion investment portfolio in October 2010. It is time to see the impact of Combs' stock picks and David Sokol's high-profile exit to the portfolio holdings. So how are Berkshires stock purchases from 2011 doing?
It has long been one of Wall Street’s favorite guessing games: Who will succeed Warren E. Buffett as chief executive of Berkshire Hathaway?
Mr. Buffett, in his annual letter to Berkshire shareholders on Saturday, said for the first time that he had chosen a replacement. But Mr. Buffett, 81, did not name the candidate, and emphasized that he and his longtime business partner, the 88-year-old Charlie Munger, were sticking around.
“Do not, however, infer from this discussion that Charlie and I are going anywhere; we continue to be in excellent health, and we love what we do,” wrote Mr. Buffett, who over five decades has built Berkshire, based in Omaha, into one of America’s largest companies.
By signaling a clear succession plan, Mr. Buffett hopes to reassure investors who have expressed concern over Berkshire’s future leadership. Berkshire’s share performance has lagged the broader stock market over the last two years, and Wall Street analysts partly blame the uncertainty surrounding a new chief executive.
Mr. Sokol’s departure, a major embarrassment for Mr. Buffett, went unmentioned in the letter. But he praised the work of several executives who are thought to be leading candidates to replace him as chief, including Ajit Jain, the head of the company’s reinsurance operations; Tad Montross, chief of the insurance business General Re; and Matthew Rose at the railroad unit Burlington Northern Santa Fe.
Beyond succession issues, the 22-page letter delved into the performance of Berkshire’s vast holdings, providing insights into the country’s business prospects.
“In short, when you look at Berkshire, you are looking across corporate America,” wrote Mr. Buffett, whose net worth is about $50 billion, according to Forbes magazine.
With a market capitalization of about $200 billion, Berkshire ranks among the top 10 most valuable companies in the United States, roughly the same size as General Electric and Google. The conglomerate has holdings large and small, like the giant railroad operator Burlington Northern Santa Fe railroad and the modest confectioner See’s Candies.
The recent Berkshire Hathaway portfolio report ending 4th quarter 2011 shows several additions to stock holdings previously purchased in 2011 and earlier periods. The Berkshire portfolio owns 34 stocks in total. Eight of these holdings were added to in the 4th and previous quarters of 2011.
To determine how these stock picks have performed, I have compared these stocks against the S&P 500 over the last six months.
Buffett isn't naming the successor. But he says the Berkshire board is enthusiastic about the executive it has picked. He says there are two good back-up candidates.
Previously, Buffett had said only that the board had three central candidates for the job.
Berkshire has also cleared up some succession questions by hiring two hedge fund managers. Buffett says those two have the "brains, judgment and character"


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