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Combs Could Take Berkshire in New Directions

As a hedge fund manager, Todd Combs took an activist approach toward investing as opposed to Buffett's buy-and-hold strategy.
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NEW YORK (TheStreet) -- Berkshire Hathway's (BRK.A) - Get Report investment approach could change dramatically under Todd Comb's watch.

During his history as a hedge fund manager, Combs' approach to investing has been particularly active, noticeably different from

Warren Buffett's

long-term, buy-and-hold strategy.

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Buffett handed a significant chunk of his legendary portfolio over to Combs, with the intent on making the 39-year- old the next chief investment officer for Berkshire Hathaway.

Until recently many Buffett followers saw David Sokol, the head of Berkshire Hathaway's MidAmerican Energy Holdings and CEO of fractional jet-sharing program NetJets, as the leading candidate to take over Buffett's position.

Now it appears as though his job will be split in two: Combs will be CIO while the position of CEO remains yet to be determined.

Although he is now known for being handpicked by Buffett to manage Berkshire Hathaway's portfolio upon his departure, Combs has already staked his claim in the financial world.

For the past five years, he has led the hedge fund, Castle Point Capital. According to the

Wall Street Journal

, Combs' fund is primarily focused on financials with $400 million in assets. Major holdings include

Mastercard

(MA) - Get Report

,

State Street

(STT) - Get Report

and

U.S. Bancorp

(USB) - Get Report

.

>>View Castle Point Capital's Portfolio

Combs is slated to step down from Castle Point so that he can make the transition to Berkshire. As he becomes more acquainted with the inner workings at Berkshire, he will eventually take the reigns of its entire portfolio, valued at approximately $100 billion.

Combs will certainly add an element of youth to Berkshire Hathaway which is currently led by 80-year-old Buffett and his partner, 86-year old Charlie Munger. Additionally, the fund manager will likely offer new and unique investing strategies for the portfolio, taking it in new directions.

Traditionally, Buffett has been known for picking out undervalued companies with plenty of upside potential. More recently, however, his portfolio has been focused on defensive plays such as

Coca Cola

(KO) - Get Report

and

Wal-Mart

(WMT) - Get Report

.

The large positions in companies such as these will ensure that Berkshire will see stable, albeit conservative returns for the long term. Berkshire's acquisition of Burlington Northern Santa Fe Railroad puts Buffett's investment strategy into perspective; the investor explained that the deal would benefit Berkshire Hathaway shareholders over the next 100 years.

Buffett has explained that he currently has no intentions of stepping down from his post at Berkshire Hathaway. However, with the announcement of a new CIO, we appear to be on the cusp of a new era for Berkshire Hathaway.

What this means for the company's future is unclear but it is certainly be a transition that should be watched closely from beginning to end.

Written by Don Dion in Williamstown, Mass.

At the time of publication, Dion Money Management did not own any of the equities mentioned.

Don Dion is president and founder of

Dion Money Management

, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.