OMAHA, Neb. (AP) - Warren Buffett tried to reassure his
shareholders Saturday that Berkshire Hathaway will be fine once he is gone, but
the 77-year-old billionaire offered few new details of the company's succession
plan.
Berkshire vice chairman Charlie Munger may have done more to reassure the
roughly 31,000 shareholders at the company's annual meeting.
"Well, we still have a rising young man here named Warren Buffett," Munger
said.
To which Buffett joked that everyone seems young to the 84-year-old Munger.
"And I think we want to encourage this rising young man to reach his full
potential," Munger said.
However, several shareholders still asked about the succession plan and
Berkshire's future.
Part of the reason why Michel Paquet and Lorie Armstrong made their second
trip to the annual meeting from Calgary, Alberta, is that they're not sure how
many more meetings will feature both Buffett and Munger.
"I will expect some volatility on the transition, but I'm ready for that,"
said Paquet, who plans to hold his Berkshire stock for many years to come.
To replace Buffett, Berkshire plans to split his job into three parts --
chief investment officer, chief executive officer and chairman.
In his letter to shareholders, Buffett said the company's board has three
internal candidates for CEO and four external candidates who could take over
managing the company's $75 billion stock portfolio and $35.6 billion cash.
Buffett said any one of the three CEO candidates and any one of the four CIO
candidates could step in and do some things better than he does. "There will be
no gap after my death in terms of having someone managing the money," he said.
Buffett has refused to publicly identify the candidates, but he has said
previously that after he dies his son will take over as chairman to ensure
Berkshire's culture is preserved. Howard Buffett already serves on the board.
Buffett plans to visit Europe this month as part of an effort to make sure
business owners there know about Berkshire, so they think about calling the
American giant when they consider selling their companies.
"We want to get on their radar screen," Buffett said.
Buffett told shareholders Saturday that the company's new business insuring
municipal bonds generated more than $400 million in premiums during the first
quarter. Berkshire Hathaway Assurance was launched to take advantage of credit
problems other bond insurers have been having. Buffett said most of the bond
insurance policies Berkshire has sold are on bonds that already were insured by
other companies, with Berkshire charging a higher fee than the original insurer.
On Friday Berkshire reported first quarter net income of $940 million, or
$607 per share, in the quarter ended March 31. That's down significantly from
the net income of $2.6 billion Berkshire generated a year ago.
The biggest reason for the drop in net income was an unrealized $1.6 billion
pretax loss Berkshire recorded on its derivative contracts. Including the
derivative losses, Berkshire's net investment losses in the quarter totaled $991
million. A year ago, the Omaha-based company recorded a $382 million investment
gain.
In Berkshire's annual cartoon, part of a humorous movie at the start of the
meeting, Buffett and Munger spoofed the presidential campaign. The cartoon
depicted Munger running for president as a write-in candidate for a fictional
"Financial Independence Party."
At a campaign event, the cartoon Munger delivered real change -- by offering
a boy two dimes for a quarter.
Munger also had an answer for all the nation's ills, all involving products
made by Berkshire subsidiaries:
Global warming? Munger recommended eating a Dairy Queen Blizzard a day.
Health care? Eat more See's Candy. Economic problems? Munger promised to put
Buffett in charge of the Federal Reserve, the Treasury Department and the
Commerce Department.
An animated Hillary Clinton laughed at the notion of Munger's candidacy,
while Barack Obama lamented that he thought he was the candidate of change. The
cartoon of Republican John McCain celebrated Munger's candidacy: "Excellent! A
candidate older than I am."
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