Investment Capital Management-Second Inning

[Guest longinvestor]

Some questions given Berkshire's rapidly growing investment $ pool; This is a big factor in the leadership transition.

 

Todd and Ted now run $10 B each; the word out there is that they will take over the entire investment portfolio of $100+B eventually. Or are there alternatives we have not seen yet, like

 

- A few more T's? In a sense, limit the individual investment pool for better returns.

- How about assisting subs in their tuck in m&a deals? Especially the smaller ones with operational skills but not cap allocation skills?

- Size up elephant deals in the future. Speedy decisions, kinda like Buffett/Munger.

 

- Any more Tracys in the offing, with the number of smaller subs growing also?

 

And finally, who's going to play Munger? That is very hard to imagine. If Munger was that important to Buffett for the past 50 years, is it hard to imagine how much more significant the role would become for the future? Any sightings of junior Mungers in Berkshire's outer orbits? Is it one of the two T's?

[John Hjorth]

Just some more or less random thoughts here, longinvestor,

 

Some more dots here, without trying to connect them all:

 

I was very surprised, when I read Todd Combs would join the board at JPM. That board seat seems to me be quite "heavy", involving a lot of work, along with Mr. Combs work as Berkshire investment manager.

 

I was also surprised to read page p. 44 in Mr. Dimons 2016 JPM Shareholder Letter. Link. I did not know about any close contact between Mr. Buffett and Mr. Dimon before that. I suppose that this particular public initiative must have involved intense discussions, meetings etc.

 

Most likely, Mr. Buffet is giving his two money managers leeway to build up their network of contacts. That is good.

 

Ref. the 2016 Berskhire Shareholder Letter issued this year, the two investment managers run about USD 21B in total, of which USD 7.6B is pension trust assets of certain Berkshire subs.

 

The total stock portfolio is in the shareholder letter stated to about USD 122B at 2016 year end, ex. KHC. I have several times asked my self the following question: "If I had the opportunity to ask Mr. Buffett to draw a group chart of the Berkshire companies, what would he do in the drawing with: AXP, KO, IBM & WFC?"

 

- - - o 0 o - - -

 

With regard to the successor of Mr. Buffett, we all speculate, including me. My speculative guess is still the best person within Berkshire to evaluate risk, despite age.

 

- - - o 0 o - - -

 

With regard to the Vice Chairman position on the Berkshire board, I think we must all live with what to come on that position - unless any of us die before Mr. Munger. To me, there is nobody like  Mr. Munger out there.

[cubsfan]

"I was very surprised, when I read Todd Combs would join the board at JPM. That board seat seems to me be quite "heavy", involving a lot of work, along with Mr. Combs work as Berkshire investment manager."

 

 

Given Todd's background as a bank examiner, perhaps he will have a leg up on all the work required.

[John Hjorth]

"I was very surprised, when I read Todd Combs would join the board at JPM. That board seat seems to me be quite "heavy", involving a lot of work, along with Mr. Combs work as Berkshire investment manager."

 

Given Todd's background as a bank examiner, perhaps he will have a leg up on all the work required.

 

Thanks, cubsfan. Good point.

[Guest notorious546]

What is an bank examiner?

[John Hjorth]

notorious546,

 

cubsfan is referring to, that Mr. Combs worked for a time as a Florida bank regulator after graduating from Columbia.