Analyst: Warren Worries Limit Berkshire's Potential

Tuesday, 13 Apr 2010 01:03 PM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
Warren Buffett has taken steps to minimize disruption for the day he steps down from the helm of Berkshire Hathaway but concern over his succession and a weaker insurance environment limits the stock's growth potential, Barclays Capital said.

Analyst Jay Gelb has begun coverage of the insurance and investment conglomerate with an "equal weight" rating, and respective price targets of $132,000 and $88 for Berkshire's Class A and B shares. That is 9 percent above their recent closing prices of $121,050 and $80.49.

Gelb said that even with February's takeover of railroad company Burlington Northern Santa Fe Corp., Berkshire's operating earnings appear "stalled" and may grow only slightly in 2010 and 2011, and the company may see slowing growth in book value and reduced return on equity through 2011.

Growth at the Geico Corp. auto insurance unit should slow in 2010 as underwriting margins narrow, while reinsurer General Re may see unchanged premium revenue because of "disciplined" underwriting and rising catastrophe losses from unusually low levels.

As to succession, Buffett, 79, has said he has three internal candidates to replace him as chief executive, and a few candidates to take over investments at Omaha, Neb.-based Berkshire.

Gelb said Buffett "probably has enough time to set his succession plan in motion to minimize disruption."

He said, though, that the "Buffett premium" in Berkshire's share price could erode once the world's third-richest person, and perhaps its most admired investor, steps down.

Many analysts consider David Sokol, who chairs Berkshire's MidAmerican Energy unit and has been improving the company's NetJets plane leasing unit, the top candidate to replace Buffett as chief executive. Gelb said Sokol would be successful in that role.

© 2014 Thomson/Reuters. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

American Exceptionalism Lost on Obama

Tuesday, 22 Jul 2014 07:57 AM

Efforts to proclaim moral equivalence are not always misguided; sometimes each side is equally at fault or close enough. . . .

Let's Not Accept Govt Overreach

Friday, 18 Jul 2014 11:18 AM

I don't think Congress should begin impeachment proceedings against President Obama right now. . . .

Holder's Race Accusations Are Cowardly

Tuesday, 15 Jul 2014 11:20 AM

Attorney General Eric Holder once again played the race card , this time on national television, in an interview on ABC' . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved