Do you plan to continue holding Berkshire once Buffett is gone?

[Charlie]

Don´t cut the flowers, to water the weed.

 

I got rich through Berkshire, so why should I sell? That doesn´t make sense. 

 

Berkshire has a lot of structural advantages and is very good at capital allocation and very rational and Munger and Buffett advise their 

children not to sell. It´s a No-Brainer not to sell (of course also because of taxes).

 

Don´t kill your golden goose.

 

The money managers always want that people sell their Berkshire, probably for their self-interest. 

I have heard a 100 times that this and this stock is smaller, so it has to outperform Berkshire.

Most of the times it doesn´t work out and it ends badly. 

[Castanza]

On 10/15/2024 at 2:09 PM, Eldad said:

I have decided to go from about 15% to about 5% over the next couple of years. 
 

I started to think about how Charlie and Warren kind of brag about being lazy and how it helped them (hands off approach to subs, only buy during bear markets etc.) But then you start to realize that all of the successors sort of fell into their lap.

 

1. Ted paid millions to eat lunch with Buffett

2. Todd cold called Charlie over and over

3. Greg worked at MidAmerican 

4. Jain, random introduction

 

If you notice almost everyone in Warren’s stories of past friends, family, etc. is “extraordinarily talented” at this that or the other. 
 

I just don’t know if he actually knows if these guys are the best or if these are just the best he knows. 

 

"I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will." 

 

One would hope Berkshire has taken a similar approach to their own business. With the companies they own/have stakes in, and the amount of cash on hand, I don't think there will be any reason to run for the door when Buffett passes. Money buys time and gives options. Ted, Todd, Greg, and Jain (although not young themselves) have plenty of time to figure things out and communicate with their shareholder base. I highly doubt it will be a silent in the dark transition, I would imagine first order would be to assure the unique shareholder base that they plan to continue the legacy of Buffett and Munger. 

[CassiusKing1]

2 hours ago, Castanza said:

 

"I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will." 

 

One would hope Berkshire has taken a similar approach to their own business. With the companies they own/have stakes in, and the amount of cash on hand, I don't think there will be any reason to run for the door when Buffett passes. Money buys time and gives options. Ted, Todd, Greg, and Jain (although not young themselves) have plenty of time to figure things out and communicate with their shareholder base. I highly doubt it will be a silent in the dark transition, I would imagine first order would be to assure the unique shareholder base that they plan to continue the legacy of Buffett and Munger. 

Good post.

 

I agree.  With the amount of cash that has been freed up and how long Greg has been able to sit next to and learn from WEB I'm positive things will be fine.  My biggest concern is who will be taking over for Ajit.  That's kind of the motor behind this whole thing.  Hopefully he has had his own "Greg" sitting aside him as well these last few years!

[boilermaker75]

On 10/15/2024 at 3:25 PM, John Hjorth said:

 

 

Off topic:

 

Mike [ @boilermaker75 ] and @Xerxes,

 

Thank you for sharing your exchange here. Ordered 'The House of Morgan' today.

 

John, @John Hjorth you will enjoy it. If I recall, somehow Chernow was able to get into JPM 's archives to research the history. 

[boilermaker75]

John, @John Hjorth I have a traditional US IRA. So I will also have forced, taxable withdrawals starting in 2027. I probably should have converted to a Roth IRA where you pay taxes and then there are no future taxes no matter how large it grows!

[crs223]

On 10/14/2024 at 1:00 PM, 73 Reds said:

easier than for those of us with substantial deferred cap. gains

 

Being able to move in and out of positions on a daily basis makes decisions harder, not easier!

[nsx5200]

All Berkshire need to do, post Buffet, is, in Charlie's words, not do stupid stuff.  Big bets like Japan/Apple will be harder to come buy but we've seen how even during the recent few years, Buffet's been buying back Berkshire, implying that in Buffet's mind, Berkshire was still undervalued.  Assuming Buffet didn't price in a Buffet premium during the buy back periods, there was no Buffet premium.  I don't remember seeing the exact criteria for buy back, but looking at when the buy backs occurred, I would guesstimate it around P/E of 10.  I imagine immediately post-Buffet, there would be some immediate sell pressure, due to fear, that opens up opportunities for buy backs.  So assuming Buffet's ego didn't price in a Buffet premium for Berkshire price during the buy backs(and there's no indication that was so, otherwise Charlie would've given Buffet a good spanking when he was still around), the remaining thing to do for us investors, is to better narrow down his criteria for the buy back, and practice what Buffet would do in those scenarios: buy Berkshire.

 

So I've put in my initial guess of P/E of 10 into the hat.  If you have more data points indicating that there's a better criteria, then please contribute.  TIA.

[Xerxes]

On 10/17/2024 at 1:46 PM, boilermaker75 said:

 

John, @John Hjorth you will enjoy it. If I recall, somehow Chernow was able to get into JPM 's archives to research the history. 

I don’t go often to NYC, but the two times in the past 15 years or so, that I was in NYC, I was passed by the JP Morgan library.
 

I would highly recommend.

 

Below are not my picture. I just took these from the net. Gives an idea. It is not huge, but just the Red Room makes it totally worth it. 

 

 

[WFF]

On 10/18/2024 at 1:22 AM, CassiusKing1 said:

Good post.

 

I agree.  With the amount of cash that has been freed up and how long Greg has been able to sit next to and learn from WEB I'm positive things will be fine.  My biggest concern is who will be taking over for Ajit.  That's kind of the motor behind this whole thing.  Hopefully he has had his own "Greg" sitting aside him as well these last few years!

I believe Ajit said the board has identified his successor already,  but undisclosed to the public.  Given Todd’s work at GEICO,  esp if he turns it around, one has to wonder if that person would be Todd.  

[CorpRaider]

Yeah will probably look to buy more on any big weakness after. 

[kiwing100]

On 10/16/2024 at 12:02 AM, Milu said:

yes you make some good points, but there are probably more counter examples where the succession hasn't worked out, but we are less likely to hear of those due to survivorship bias.

 

 

 

 

A couple of other notable long tenured CEO's transitioning to new CEO's

Citigroup - Sandy Weill transition to Chuck Prince
AIG -  Hank Greenberg transition to Martin Sullivan

 

Edited November 6 by kiwing100