JPM JP Morgan Chase and Co

By Anupreeta Das 

J.P. Morgan Chase & Co. named one of Warren Buffett's two stock pickers to its board, raising the executive's profile and bringing the patina of Berkshire Hathaway Inc. to the bank.

Mr. Buffett hired Todd Combs in 2010 to be one of two investment managers who would eventually take over Berkshire's gigantic stock portfolio as part of a succession plan. Since then, Mr. Combs has steadily expanded his role at the conglomerate.

Although senior Berkshire executives occasionally sit on boards of companies in which Mr. Buffett's company owns a stake, it is less common for a Berkshire executive to sit on an outside board.

Mr. Combs is "an extraordinary leader, investor and thinker, with a deep understanding of finance and business," J.P. Morgan Chief Executive James Dimon said in a statement about Mr. Combs joining the board.

Mr. Dimon, who is personal friends with Mr. Buffett, got to know Mr. Combs during his visits with the Berkshire chief in Omaha and was impressed, according to people familiar with the matter.

In particular, Mr. Dimon was struck by Mr. Combs's investment knowledge, especially the payments business, from processing to emerging technology, according to a person familiar with the board's decision.

Mr. Combs, who graduated from Florida State in 1993 and worked as an analyst for a state financial regulator, attracted attention at Berkshire Hathaway after sending a letter to Berkshire Vice Chairman Charlie Munger. After some persistence, the two met for lunch at the California Club in downtown Los Angeles.

Mr. Munger later phoned Mr. Buffett and told him: "This is a guy I am sure you are going to like," Mr. Munger recalled to The Wall Street Journal a few years ago.

Mr. Combs previously ran Castle Point Capital, an investment partnership he founded in 2005. Castle Point, which wound down when Mr. Combs joined Berkshire, held a $11.4 million position in J.P. Morgan, according to a securities filing from November 2010. The hedge fund also had stakes in financial-service companies such as MasterCard Inc., CIT Group Inc. and U.S. Bancorp., and smaller stakes in firms such as Wells Fargo & Co.

Among Mr. Combs's first stock picks at Berkshire were MasterCard and Visa Inc., two of the largest payments-technology companies. Berkshire owned just under five million MasterCard shares and 10 million Visa shares as of June 30. Although the positions are relatively small for Berkshire, Mr. Combs is known to be a thorough reader of company reports and filings, in the mold of his boss.

Mr. Buffett has credited Mr. Combs for bringing industrial components maker Precision Castparts Corp. to his attention. Earlier this year, Berkshire closed its largest-ever deal to buy Precision for $32 billion. Although Mr. Combs didn't initiate the acquisition, Mr. Buffett studied the company only because Mr. Combs had bought the stock for Berkshire's portfolio.

Mr. Combs's appointment to the J.P. Morgan board comes as the bank's rival Wells Fargo & Co., one of Berkshire's biggest stockholdings, undergoes scrutiny about its sales tactics after allegations that employees opened fake accounts without customers' knowledge. Berkshire owns around 10% of Wells and 16.4% of American Express Co.

Although Berkshire doesn't own J.P. Morgan shares, Mr. Buffett has long been a fan of the bank and its CEO. He has praised Mr. Dimon's leadership, including in an interview with the Journal in 2014 where he called the bank "a huge plus to the American financial system" during the financial crisis.

Mr. Buffett gave Mr. Combs a ringing endorsement for the board job when Mr. Dimon broached the idea, according to the person familiar with the board's decision.

Both he and Ted Weschler, Berkshire's other investment manager, have taken on roles well beyond picking stocks. The duo regularly help Mr. Buffett with deals, especially complex transactions. The octogenarian investor misses no opportunity to praise them.

"Though Todd and Ted Weschler are primarily investment managers -- they each handle about $9 billion for us -- both of them cheerfully and ably add major value to Berkshire in other ways as well," Mr. Buffett wrote in his most recent annual letter. "Hiring these two was one of my best moves."

Write to Anupreeta Das at anupreeta.das@wsj.com

(END) Dow Jones Newswires

September 21, 2016 02:47 ET (06:47 GMT)

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