Buffett May Unveil Heir Soon - Analyst Blog
April 18 2012 - 9:48AM
Zacks
Warren Buffett, the Chairman and CEO of Berkshire
Hathaway Inc. (BRK.A) (BRK.B), has had no intention till
now to step down from his post, but now it seems that the
octogenarian will soon have to do some rethinking in this regard as
there has been an unprecedented development in Buffett’s health. On
Tuesday, he announced that he has been diagnosed with Stage 1
prostate cancer.
Despite an early diagnosis, the side effects of the impending
treatment of the 81-year-old could be a concern. Warren Buffett has
decided to undergo radiation treatment. Given his age, the
radiation treatment may have a negative effect on his
health.
Nevertheless, Buffett sounded optimistic in his letter to
shareholders saying that he was feeling normal and his energy level
continued to be 100%.
This sudden announcement has once again raised a question about
Berkshire’s succession plans in the minds of its shareholders.
Buffett had already announced during the last shareholder’s meet
that the prospective candidates have been finalized for the higher
ranks. However, the names have been kept under wraps.
The shareholders will continue to feel anxious until they get to
know the names or get more clarity on the company’s succession
plans. Buffett plans to split up his single job into three parts
that of a CEO, Chairman and investment management for the smooth
functioning of the organization. We also believe that it is
extremely difficult for any new management or individual of this
behemoth conglomerate to ably fill in his shoes.
As far as the operations of Berkshire Hathaway is considered,
sans Buffett, we believe the conglomerate will continue to run
swiftly, with most of its businesses performing exceptionally well.
Though some of its businesses have been affected in the recent
years due to the U.S. downturn, they are slowly recovering with the
gradual recovery of the economy.
Moreover, Buffett’s practice of letting the units’ managers
handle their own operations independently, without his significant
interference, is expected to keep the wheels of the business
running smoothly even if he is not around.
Though Buffett has streamlined operations to run on their own,
greater concerns surround the investment role played by Buffett
along with the company’s Vice-Chairman Charlie Munger, who is
already 88 years old. Buffett is known as a value-investor
worldwide. While he has picked up hedge fund manager Todd Combs and
Ted Weschler to manage the company’s investments, utilizing the
vast amount of cash that the company generates quarter after
quarter is a mammoth task.
Though Berkshire has to run without Buffett someday, the two are
so closely interlinked that any news relating to Buffett’s
retirement from the job is bound to make headlines and spark
investors’ concerns.
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