Buffett CEO, CIO Succession Questions Flare Again

(January 5, 2011) – An upcoming Vanity Fair interview with Warren Buffett further reveals how the Oracle of Omaha and the company he controls will split the functions of chief executive and chief investment officer upon his retirement or death – and who is likely to take on each role.

Speculation has swirled for years around whom would replace the world’s most legendary investor – and how they’d possibly live up to his reputation and history of returns. Currently, Buffett acts as both CEO and CIO for Berkshire Hathaway; however, in the Vanity Fair article and elsewhere, he makes clear that the roles “will be split between at least two people, and probably more."

The choice of his replacements is a point of much speculation. According to the upcoming article, there are four serious candidates for the role of CEO: Ajit Jain, leader of the company’s reinsurance operation; David Sokol, chairman of the company's utility operations; Greg Abel of MidAmerican Energy Holdings; and Matthew Rose of Burlington Northern Santa Fe. Jain and Sokol have been mentioned for a number of years as potential successors to run the business; Rose and Abel are less well known.

“Finding a CIO has proven even more challenging,” the article, quoting Buffett, states. “Apart from the issue of skill, there’s the issue of personality. Take all the people with a great track record [in investing] over the past five years. I wouldn’t consider 95 percent of them.” A recent insight into his and Berkshire’s thinking, however, was revealed by his recent choice of Todd Combs, and unknown Connecticut-based hedge fund manager, to manage a sliver of the $100 billion Berkshire portfolio. (For aiCIO’s December cover story on Todd Combs, click here).

According to Vanity Fair, Buffett plans to explain his choice of Combs in his upcoming annual letter to Berkshire investors. “Our goal was a two-year-old Secretariat, not a 10-year-old Seabiscuit,” Buffett will reportedly write.