Can Warren Buffett's Successors Maintain Berkshire Hathaway's Momentum?

Warren Buffett‘s potential successors, Todd Combs and Ted Weschler, are trailing the S&P 500 index, raising concerns about the future of Berkshire Hathaway Inc BRK BRK.

What Happened: The two potential successors are set to inherit the $354 billion stock portfolio of Berkshire Hathaway, reported Financial Times.

The duo’s performance has been under scrutiny, especially since the passing of Vice-Chair Charlie Munger in November.

At Berkshire’s annual meeting on Saturday, the company’s future without Buffett, who is 93, will be a major topic of discussion. The potential successors, Combs and Weschler, have been underperforming both Buffett and the S&P 500 index, as per the FT’s analysis.

The duo’s investment strategy, which focuses on finding good businesses with strong management teams trading at attractive prices, mirrors Buffett’s approach. However, their performance has been lagging behind, raising questions about the future of the company.

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"They don't have to check with me before they buy or sell anything," Buffett said in 2017. "Sometimes they will have talked to me about something they are doing. Other times I will just look at the monthly recap I get and then see what they've bought or sold."

"Buffett has built an extraordinary track record of investing and he has laid down through his communications clear principles and guidelines that have guided generations of investors,” said Christopher Rossbach, who invests on behalf of J Stern & Co. "It is a huge responsibility of how that will be taken forward and it is very important for investors to understand."

Investments in companies like Mastercard, Visa, and DaVita helped the two managers outperform the S&P 500 in 2012 and 2013. However, their portfolios have mostly trailed behind both the S&P 500 and Buffett’s performance since then.

This was acknowledged by Buffett himself in 2019, noting that Combs and Weschler were slightly behind the index.

"I've never felt that it's in the interest of Berkshire shareholders to talk about anything that we do that is successful and that we want to continue to do. Both Todd and Ted have been invaluable to Berkshire, and our shareholders have profited significantly from their activities," Buffett said according to the report.

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