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Filling Buffett's Shoes at Berkshire Hathaway

Stocks in this article: BRK.A BRK.B

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By Andy Obermueller

NEW YORK ( StreetAuthority) -- Warren Buffett is back in the news, and not on the opinion pages about the so-called "Buffett Rule" that would subject high-income earners to additional taxation.

Buffett is on Page One because he has prostate cancer. It's Stage One, easily treatable and not life-threatening, The revered Oracle of Omaha says he not only feels great but will keep working his normal schedule, though his travel will be restricted later this summer as he undergoes radiation.

Warren Buffett

So, predictably, it's game-on for Buffett watchers, who are all over the airwaves speculating as to the palace intrigue and about how Ajit Jain clearly will be the next CEO. But Jain is too valuable as Lord Chancellor of Berkshire Hathaway's (BRK.A), (BRK.B) reinsurance business. He's no crown prince. A coronation would be a lovely accolade, surely, but Jain is far too effective, and far too happy, to be moved from his current role. Keeping talent in place is a longstanding Berkshire tradition.

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What's more, Berkshire's CEO candidate doesn't know that he or she has been chosen by the board as the leading contender, and there is nothing that happens at Berkshire that Jain isn't told about. Buffett talks to him every day. That also excludes Buffett's new stock pickers, Ted Weschler and Todd Combs, who took over running a portion of Berkshire's portfolio after longtime investment manager Lou Simpson retired from Geico in late 2010.

Every candidate being bandied about on financial TV is an operations guy. That's wrong. The chairman of Berkshire needs to be all about deal-making. After all, each Berkshire unit, from See's Candy to MidAmerican Energy, runs itself.

Buffett has long stated that excellent management is a prime requirement for Berkshire acquisitions, as it is the only thing that Berkshire cannot supply. Once companies are acquired, they are independent business units. Buffett has joked for years that he delegates to the point of abdication. He's not standing by the supply cabinet monitoring who takes Post-It notes. (I hear he has a well-paid secretary for that sort of thing.)

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