Buffett, by way of over 80 operating subsidiaries at Berkshire Hathaway including a sprawling insurance operation, recent acquisitions such as BNSF Railways and Lubrizol and fast-growing units like MidAmerican Energy, Iscar and Marmon Group, will see his investments tested in a new epoch. Were Buffett to announce his exit from Berkshire tomorrow -- he won't -- the "Oracle's" wizardry will be bench-marked by way of Berkshire Hathaway's earnings and its performance relative to the S&P 500. As a result of the momentum Buffett has imparted on Berkshire by way of acquisitions, careful allocation of capital among operating subsidiaries and an investment portfolio that's leveraged to U.S. and international growth by way of stakes in Coca-Cola ( KO), Wells Fargo ( WFC) and IBM ( IBM), some investors are almost indifferent to succession plans for the long-time Berkshire head. Shareholders are investing in Berkshire's ownership of operating businesses and the leverage that the company should get from the next five-to-10 years of economic improvement, according to William Smead, chief investment officer of Smead Capital, an investor in Berkshire's B-shares. Smead expects Berkshire will sustain compound internal growth rates of about 15% annually for years to come. Mario Gabelli of GAMCO Investors said earlier Friday on CNBC he expects Berkshire's internal book value growth to slow from historic rates of about 20% annually to 10% annually. Still, Gabelli expects a 10% book value growth rate to outperform high single digit gains posted by the S&P 500.
Were Berkshire to perform below Buffett's goal posts in 2013, he indicated considering a dividend for the conglomerate, however, shareholders generally dismiss the prospect of such a move. Buffett's legacy is a hot topic heading into Berkshire Hathaway's annual shareholder meeting on May 4, given uncertainty surrounding a successor to run the conglomerate with a market capitalization approaching $270 billion. "I think the succession question will be obviously front and center," said Thomas Russo, a partner at Gardner, Russo & Gardner in an April interview. "I gather there will be some commentary." In late 2011, Buffett also said his son, Howard Buffett, will succeed him as a non-executive chairman of Berkshire to oversee a maintenance of the firm's values. Less clear is who would be chief executive of Berkshire Hathaway. Currently, speculation centers on insurance unit head Ajit Jain, BNSF railroad CEO Matthew Rose, MidAmerican Energy CEO Greg Abel as leading candidates to be Buffett's successor. Buffett has informed Berkshire Hathaway's board of directors of his successor. Russo, the Berkshire investor, sees room for multiple job openings to replace Buffett, when the time comes. He expects up to four roles to fit the shoes of Buffett. Gardner, Russo & Gardner is Berkshire's tenth largest shareholder with a stake of nearly $800 million in the company's Class A shares and over $200 million of Class B shares, according to Bloomberg data. Russo says Berkshire holding's represent about 11% of the firm's assets. While succession and Berkshire Hathaway's performance as the conglomerate grows in size both stand out as uncertainties heading into the company's annual meeting, they also may eventually prove Buffett's greatness. Buffett likely has many years left at the helm of Berkshire to cut acquisitions and fire his elephant M&A guns before he passes the reins to a successor. Unlike his hedge fund and mutual fund contemporaries, however, Buffett's track record will be tested long after he's left Berkshire. -- Written by Antoine Gara in Omaha, Nebraska. Follow @antoinegara