Buffett Out? Trott Coming In?

[Today, we have a guest author, Daniel Wahl, from The Guru Five.  Thanks Daniel.]

As usual, Buffett can’t shake someone’s hand without the press immediately speculating whether that person is (or is not) going to be his successor. Getting old isn’t all beer and skittles–even if you’re a billionaire.

The latest, from Bloomberg, is that Byron Trott’s departure from Goldman Sachs to run a venture fund that Berkshire Hathaway will partly finance, could signal that he will take over the 130 billion dollar company when Buffett leaves it–in a coffin.

Alice Shroeder thinks he’s the “perfect candidate” while Whitney Tilson disagrees. “There is no chance the Byron Trott would be the CEO successor.” That job is going to one of Berkshire’s existing operating managers.

For the record, Tilson is right. But can everybody stop and ask themselves why it matters so much? Warren Buffett is the world’s greatest investor–that’s true. His ability to spot and make investments that will pay off years and decades down the road have allowed him to turn the cash flow of a struggling textile company into one of the world’s truly great enterprises. Oh, and earned billions for himself along the way.

Notice, though, that just as investments made 20 and 30 and 40 years ago continue to pay out today, the actions Buffett is taking now will echo throughout the future as well. Those echos may be pleasing to the ears of shareholders–or not–but the point is that the vast majority of Berkshire’s earnings will continue to result from the thoughts and actions of Buffett long after he no longer tap dances to work.

I’m not arguing here that Berkshire shareholders shouldn’t care who succeeds Buffett. But they should definitely care a lot less–and realize that speculating about this person or that one is largely a waste of time. There are far better things to think about in evaluating Berkshire, or constructing one’s own portfolio than that. Don’t you agree?

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2 responses to “Buffett Out? Trott Coming In?

  1. Agreed.

    and if folks are interested in riding coattails,
    rather than his company, (even Buffett confessed to riding coattails when he was younger.)

    never before have copycats been able to pick several Buffett investments (diversified) at less than his cost, which he has obviously chosen to withstand the test of time.

    How about a portfolio of them.

    COP
    KFT
    USB and/or WFC
    JNJ
    BNI

    and you are done.

    All available at lower than Berkshire’s cost basis.

  2. Nicely diversified list as well, Sam. Energy, Consumer Staples, Financial, Health Care/Pharma, Transport.

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