The Race To Succeed Warren Buffett is Now Down To These 5 Men

berkshire hathaway

With the massive news that David Sokol has resigned from Berkshire Hathaway, there are now five men that are the likely candidates to succeed the 80 year-old CEO.

There’s always been a lot of talk about Warren Buffett‘s successor; not least because in November a man called Todd Combs exploded into our lives and was dubbed Buffett’s “heir apparent.”

And a look at Buffett in Vanity Fair painted a totally different picture of the role Combs will likely play in Berkshire’s future, with David Sokol presented as the likely heir.

Of course, that possibility is out now.

Obviously nothing is set in stone, and Buffett balks at any mention of his stepping down. But he admits that the subject is discussed at almost every board meeting, and a successor (or successors) must be chosen.  He even told VF that “not taking care of Berkshire would be like not having a will – cubed.”

Li Lu: Hedge Fund Manager

Why he's not:

  1. Buffett's successor is almost definitely going be recruited from within the Berkshire family.
  2. He declined to join the firm last year.

Why he is:

  1. Munger told the WSJ: ''In my mind, it's a foregone conclusion' that Li Lu - a Columbia graduate and hedgie, would become a top investment manager at Berkshire.
  2. Munger rarely makes those type of complimentary comments.
  3. He made a killing by investing in Chinese battery-maker and car company, BYD.
  4. Timing is everything and a no in 2010, doesn't mean a no in 2020.

Source: Vanity Fair

Ajit Jain: Insurance-Division President at Berkshire Hathaway

Greg Abel: CEO of MidAmerican

Why he's not:

  1. His name has been thrown around as a possible successor, but not like Combs or Sokol.

Why he is:

  1. He's David Sokol's number two.
  2. He's in the family - CEO of MidAmerican.
  3. He knows how to manage mammoth companies - in fact, he's CEO of four.
  4. He is 'responsible for the evaluation of opportunities relating to acquisitions and project development' - a major part of Berkshire's business model.

Matthew Rose: CEO Northern Burlington

Why he's not:

  1. Like Abel, his name has been thrown around as possible successor but not with the same vigor as Sokol or Combs.

Why he is:

  1. He has experience in running a massive company - one of the most profitable of Berkshire's holdings.
  2. He's relatively young.
  3. Buffett has repeatedly praised the job Rose has done at Burlington.

Todd Combs: Hedge Fund Manager

Why he's not:

  1. Combs hasn't had more than 3 years experience running a company.
  2. Combs is more suited to the role of CIO and the likely scenario is for Buffett's job to be split in two - one CEO; one CIO - when he goes.

Why he is:

  1. He's young and can be moulded - 'Our goal was a two-year-old Secretariat, not a 10-year-old Seabiscuit' he told Vanity Fair.
  2. Buffett describes Combs as a 'good, smart human being. He understands investments, and he understands limitations. He will never do anything really dumb.' Ie. He's not into high-risk, and neither is Buffett.

Source: Vanity Fair

OUT: David Sokol, former head of Berkshire subdiaries NetJets and MidAmerican Energy

Why he's not:

  1. Um. Silence.

Why he is:

  1. He's Buffett's Mr. Fix-It - that means he trusts him.
  2. He's within the family.
  3. He knows how to manage and turn-around companies.
  4. In the foreword to Sokol's book, Buffett writes, 'He brings the business equivalent of Ted Williams' .406 batting average to the field of business management.'

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