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When Buffett Retires, Berkshire Hathaway Should Comfort Shareholders

Stocks in this article: BRK.A BRK.B USG WFC AAPL

So, what could Buffett and Berkshire's board do to ease the pain of the CEO's eventual departure? How about announcing a plan to spinoff to shareholders parts of the publicly traded dynasty? Then by demonstrating the hidden value of those parts, Berkshire Hathaway could offer a reassuring consolation prize.

When one considers the vast diversity of the publicly traded U.S. stocks owned by the company as of the end of 2013, including 31% of the shares of USG Corporation (USG) shares and over $31 billion of Wells Fargo (WFC) stock, carving out a special distribution to its devoted shareholders shouldn't be difficult.

Then there are the privately held pieces like Geico, the second-largest car insurer in the U.S., and Burlington Northern Santa Fe railway, which, according to Bloomberg, is responsible for nearly 21% of Berkshire's pre-tax earnings. Either would make a valuable spinoff.

Perhaps Buffett will take note of what Apple (AAPL) finally did to restore confidence in its stock and encourage shareholders in a big way. A Berkshire Hathaway stock split may be part of the answer as well as an increase in the company's stock buyback program.

Frankly, I don't anticipate that my suggestions will be implemented. I do think Buffett will share some of his thoughts about the future of Berkshire Hathaway in his upcoming letter to shareholders. For now I'm not buying the stock until a correction ensues and a meaningful succession plan is made public.

At the time of publication the author had a position in AAPL.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.


Marc Courtenay is the founder and owner of Advanced Investor Technologies, LLC, as well as the publisher and editor of
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