Buffett letter may hint at bond plan, succession
NEW YORK (Reuters) - Warren Buffett's annual letter to Berkshire Hathaway Inc (BRKa.N) (BRKb.N) shareholders may hint at what's next in his bold foray into bond insurance but is unlikely to give specifics on his search for a successor.
Berkshire said it plans to release Buffett's commentary, perhaps the most dissected shareholder letter in corporate America, and its annual report Friday afternoon.
Unlike most CEOs who provide sterile, lawyer-massaged, upbeat overviews of their companies, Buffett writes in homely terms about what he wants: his successes, his mistakes, and the markets and the economy and the people who mess them up.
"This is exactly Buffett's kind of market, with dislocations in the financial space," said Mohnish Pabrai, author of "The Dhandho Investor" who models his portfolios after Buffett and last June agreed to donate $650,100 to charity to dine with the billionaire.
One dislocation is in the troubled bond insurance industry, where the security of Omaha, Nebraska-based Berkshire's "triple-A" credit rating holds great appeal for issuers and investors. Buffett created his own bond insurer in December, led by Berkshire's top insurance executive, Ajit Jain.
But Buffett will talk about more. Last year's letter ran 22 pages and some 13,000 words on such issues as the soaring U.S. trade deficit, the government's and individuals' over-reliance on debt, greedy hedge funds and excessive executive pay. Buffett takes a $100,000 annual salary to run Berkshire.
Still, Buffett, 77, may be coy on the issue of succession.
To be sure, America's most famous investor, the so-called Oracle of Omaha, now thinks more about his legacy and the day he ends his now 43-year run at Berkshire.
He has committed much of his roughly $52 billion net worth to charity, mainly the Bill & Melinda Gates Foundation. And an authorized biography is slated for September release.
Buffett has said he has three internal candidates to succeed him as chief executive, and four candidates to run Berkshire's $107 billion stock-and-bond portfolio as chief investment officer.
Berkshire did not respond to a request for comment.
Speaking in Toronto on February 6, Buffett said youth may be a priority for his board. "Anybody who takes my (CEO) job would do better if they have a long run ... say 15 years," he said.
Analysts have long touted as CEO candidates Jain, General Re Corp's Joseph Brandon, MidAmerican Energy Holdings Co's David Sokol, Geico Corp's Tony Nicely, and NetJets Inc's Richard Santulli. Nicely and Santulli are already in their 60s.
As for the CIO candidates, Buffett said "there's no reason to bring them on now," though all showed "not only the desire but the eagerness ... to come with us the day I go ga-ga."
Chad Kane, who invests $950 million at WoodTrust Asset Management in Wisconsin Rapids, Wisconsin, said, "It's hard to state your successor when you don't know when you're going to hang it up. It's possible all seven names could change." Continued...
