Warren Buffet Found His Successor
Warren Buffet Found His Successor
Warren Buffett, one of the most famous investors in the world, has found a successor for his investment strategy of Berkshire Hathaway, an investment vehicle through which he became the third richest man in the world.
The billionaire Warren Buffett, the third richest man in the world with a fortune of 47 billion dollars, announced that it has hired a young manager that will manage a “substantial part” of Berkshire Hathaway, namely a substantial part of the company’s investment portfolio of $ 100 billion, writes The Wall Street Journal.
Buffett’s surprising choice is Todd Combs, 39, who has spent the last five years at the helm of the investment fund Castle Point Capital Management, with assets of 400 million dollars. “The Oracle of Omaha”, said about Combs that he was a talented manager after whom he had headhunted for three years and that Combs fits perfectly into his company. “He was always in love with Berkshire. I’m sure it’s the best choice, he is the kind of person we needed,” says Buffett.
There was no announcement yet on what responsibilities will divide to Combs, but the focusing of Castle Point fund’s on the financial services sector may give some clues regarding his future responsibilities.
The challenge seems important for the young manager in Connecticut, who until now had in hand a portfolio of only U.S. $ 400 million, while at Berkshire Hathway he will take on a significant percentage of the total assets exceeding 100 billion dollars.
A fund manager since 2005
Todd Combs founded the company Castle Point in 2005 after he had been sustained by Stone Point Capital, a company whose director is Stephen Friedman, a former executive at Goldman Sachs and at the U.S. central bank’s office (the Fed) of New York.
Combs’s fund grew by 13.6% in 2006, and continued the trend up until 2007 when it won 19%; it lost 5.8 percent in 2008 and returned to a positive trend with an increase of 6.2 percent last year. In the first nine months of this year, the fund has encountered new problems and was forced to report a decrease of 4%.
Before performing at Castle Point, Combs led the financial services department at the New York investment fund Copper Arch Capital. He graduated from the University of Florida and attended a master course in business at Columbia University, where Warren Buffett also attended University. “He is extremely well prepared, he reads 500 pages a week and does his own documentation,” said Chuck Davis, CEO at Stone Point.
“Now they have someone to replace me”
The notice of appointment of the young manager is held by Warren Buffett as “an important step. If I were to die tonight, the Board of Directors will have someone to put in my place.”
The legendary investor, now 80 years old, however, says that until he dies or will withdraw from business, all the responsibilities of his executive functions from Berkshire Hathway will be disseminated to several people. He is currently chairman and chief executive of Berkshire investment.
“I will keep the management positions at an executive and investment level,” said Warren Buffett.
Berkshire said Todd Combs will manage a portfolio of assets that he is already familiar with and that he will gradually increase his involvement in the following months until the official announcement of appointment into function will have been made.
For this position, there have been in competition two other managers of investment funds, including Li Lu, a Chinese- American, but both of whom gave up the race on their own, according to Warren Buffett’s statements.
Li Lu has a close relationship with the Vice President of Berkshire, Charles Munger, for whom he manages a large part of his assets which are not placed in Buffett’s company. However, the Chinese-American preferred his current position at the expense of the opportunity of being Buffett’s successor at the helm of Berkshire.
The manager position at Berkshire can be a real challenge for the interested candidates. Besides the fact that “Buffett’s shoes” can be uncomfortable, the remuneration of investment fund managers can exceed the threshold of one billion dollars in their entire careers, while the billionaire does not agree with such a policy. “You can make lots of money in this position, but not billions,” he says.
Born in 1930, Warren Buffett, bought the first share at age 11 years, and during high school he invested in a company owned by his father and bought a farm which he rented.
He made his first million dollars by 1962, and the threshold of one billion dollars was reached in 1990, when Berkshire began selling common shares.
The investment principles of Warren Buffett
Invest in companies, not shares.
“When you buy shares of the transaction as if I purchase a private company. We look at the economic prospects of the company, the people they lead and the price you must pay.”
Invest in companies you know
“Could we have foreseen 30 years ago the level of development that TVs or computers will reach? Certainly not. So, why look for the needle in the haystack when you can choose the one that is right in front of you.”
Keep long-term actions
“We keep the shares as long as we expect the intrinsic value of the company to grow at a satisfactory rate. Do not sell the shares just because they increased in their value or because we have had them for too long.”
Ignore short-term price fluctuations
“We are guided by the operational results and not on the daily or annual listings of shares. Markets can ignore a successful company for a period of time, but with time they will have to confirm the company’s performance.”
Buy good business when prices are down
“Many investors make the mistake even if they are net buyers to enjoy when prices rise and when they decline to feel sad. Prospective buyers should rejoice when they see prices falling.”
