In a very important sucession move, Buffett has announced that Todd Combs, a 39-yr old manager formerly with Castle Point Capital, will run a “significant portion” of Berkshire’s portfolio. It’s too soon to say much about the guy, and we’ve got a few research projects to execute. But before everyone gets lost in the inevitable deluge of stories “dissecting” Mr. Combs, it’s important to note that Buffett has taken his time looking for candidates, in an orderly and extremely discrete way for a company this big and a job this iconic. More comments and links inside.
It’s been widely known that Buffett’s role can’t possibly be concentrated in just one person after he’s gone, so there’ll be a CEO, a Chairman and a CIO (or many). There had been some candidates’ names going around, one of them Li Lu, who apparently turned down the job. It’s not yet clear if this appointment means that Mr. Combs will be the only CIO after Buffett retires – we’d venture that they’re keeping their options open.
The guy isn’t exactly famous and this isn’t relevant either way (good or bad), but no doubt in the next few days there will be stories on him, his background, life story and whatnots. In the meantime, we can look at Mr. Combs’ stint at Castle Point and try to extract something useful out of it (for those thinking of the same project, remember: processes, not outcomes. We can look at his portfolio moves, but we can’t know what was the process behind it all, while Buffett certainly grilled him about it and in the last few years has probably discussed plenty of these moves first hand with Mr. Combs).
Succession has always been one of the key “make-sense” reasons for a “discount” in BRK’s multiples (see the charts published in today’s LEX column on this subject below), and this latest move is just one more clear example of how much attention and thought is being put into this process. Buffett is very much concerned about his legacy in every possible aspect – and the knowledge that his full attention is set to this purpose, with the help of his extremely able counterparts – Charlie Munger, Bill Gates, Dave Sokol, Don Keough, Tom Murphy and countless others – should be a source of comfort.
The LEX story linked above also highlights a video where the reporter actually comes out much better than the person he’s interviewing…
Meet Buffett’s heir apparent – Fortune Magazine: Carol Loomis is a long-time friend of Buffett’s and a great reporter anyway. Her story is a bit more complete than other accounts. It sheds light on how the two met (through Munger), Mr. Combs’ background as an insurance quoter for Progressive (GEICO’s nemesis) and on some of Mr. Combs’ investments in the last 3-5 years. MUST-read.