Tags: Warren Buffett | Berkshire Hathaway | Successor | Letter

Buffett Declines to Clarify Plan to Eventually Replace Him

Monday, 02 March 2015 12:17 PM

Billionaire Warren Buffett won't end speculation about his eventual successor, but he reiterated that Berkshire Hathaway's board has a plan in place.

Buffett appeared on CNBC Monday after releasing his annual letter to Berkshire shareholders over the weekend.

Berkshire's Vice Chairman Charlie Munger spurred renewed interest in the replacement for the 84-year-old Buffett over the weekend because he singled out two candidates in his own letter to shareholders.

Munger said Berkshire's reinsurance chief Ajit Jain and the head of its utility company, Greg Abel, would both be excellent choices to replace Buffett.

"They are incredible managers, and we are lucky to have them," Buffett said in his CNBC appearance.

Both Jain and Abel would play key roles at the company after Buffett is gone, but he said he doesn't believe they are jockeying to be CEO.

He said Jain and Abel don't know who the successor is, but Berkshire's board discusses the plan at every meeting and knows who it would choose to lead the conglomerate Buffett built over the past 50 years.

In his letter to shareholders, Buffett said the next CEO will have to be calm and decisive while preventing arrogance or bureaucracy from taking hold at Berkshire. He has never named the candidates.

The reports Buffett gets from Berkshire's companies, which include BNSF railroad, See's Candy and the Berkshire Hathaway Home Services real estate brokerage, show the economy is improving steadily.

"It just keeps improving at a moderate pace. We see it in all of our businesses," he said.

Investors shouldn't be disappointed with 2 percent growth each year, Buffett said.

One of the questions Buffett received during the CNBC appearance came from NBA star LeBron James, who jokingly asked about what he should be investing in.

Buffett replied with his standard investing advice: most people would do best by regularly buying a stock market index fund over time instead of trying to pick individual stocks. He said most people don't have the time needed to become investing experts.

"Owning a piece of America — a diversified piece bought over time, held for 30 or 40 years — is bound to do well," Buffett said. "The income will go up over the years and there's really nothing to worry about."

Buffett also praised both IBM and ExxonMobil even though the computing business has struggled and Berkshire sold its 41 million shares in the oil producer last year.

Buffett said he likes IBM's prospects even though the company has been dealing with declining sales. He increased Berkshire's stake in IBM to nearly 77 million shares in the fourth quarter.

Buffett said ExxonMobil still has good long-term prospects even though its earnings power has been diminished by lower oil prices.

As Buffett discussed specific stocks, he avoided giving direct advice about whether to buy them and he warned investors not to act based on someone else's opinion.

"You should make your own decisions. If not, you should buy an index fund," Buffett said.

Berkshire owns a variety of companies, including utility, furniture and jewelry firms. The company also has major investments in such companies as Coca-Cola Co., Wells Fargo and American Express.

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Billionaire Warren Buffett won't end speculation about his eventual successor, but he reiterated that Berkshire Hathaway's board has a plan in place.
Warren Buffett, Berkshire Hathaway, Successor, Letter
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2015-17-02
Monday, 02 March 2015 12:17 PM
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