Succession Brings Delegation, Diluted Returns
By all counts, Buffett is a clear-thinking, spry 81-year-old. But, given actuarial tables, his life expectancy is 92 to 93 years of age. Buffett recognizes the need to delegate investment and operating responsibilities in the passage of time. David Sokol was a big mistake, and I (and many) gave him a mulligan.
Buffett has already hired two co-investment managers, Todd Combs and Ted Weschler, to help him with Berkshire's large portfolio. Will they do as well as Buffett? Probably not, as they are mere mortals, and with the benefit of hindsight and history, Buffett was a true investing immortal! What is almost certain is that Buffett's old black magic will not be easily duplicated by his appointees.
Whitney Tilson expresses sensible reservations on Buffett's replacements:
Being offered investment opportunities on terms/prices not available to anyone else also applies to buying companies outright. There's a high degree of prestige in selling one's business to Buffett. For example, the owners of Iscar could surely have gotten a higher price had they taken the business public or sold it to an LBO firm.... Buffett's Rolodex is unrivaled, so he gets calls (and can make calls that get returned) that his successors might not.In the next several years, a CEO will likely be named. Again, some more balanced views from Whitney:
Most of the 75-plus managers of Berkshire's operating subsidiaries are wealthy and don't need to work, but nevertheless work extremely hard and almost never leave thanks to Buffett's "halo" and superb managerial skills. Will this remain the case under his successors...? Buffett's reputation is unrivaled, so he is offered deals (such at the recent $5 billion investment in BofA) on terms that are not offered to any other investor -- and might not be offered to his successors.