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When Buffett Retires, Berkshire Hathaway Should Comfort Shareholders



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.

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