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Buffett's comments on Ajit


Munger_Disciple
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I still think Buffett's job will be split.  Jain will head all of the insurance divisions and Sokol would head all non-insurance operating businesses.  Whether Sokol or Jain gets the CEO title is moot, as both will be running different divisions.  The board would make all the other decisions...investment managers, acquisitions, etc. along with input from Jain & Sokol.  Cheers!

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Guest Bronco

As a shareholder, it will be interesting to see a bunch of board members make acquisition decisions.

 

I get the feeling that Buffett is trying to make this company "idiot" proof.  In other words, the businesses will be so good that it will be tought to screw them up.

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As a shareholder, it will be interesting to see a bunch of board members make acquisition decisions.

 

Remember, that the head of the board of directors for the next 20+ years isn't someone who just spent a few years assisting on the board of The Gap and Yahoo.  It's friggin' Bill Gates!  The guys who is like a son to Buffett and just happens to have been the richest guy in the world for the bulk of the last 15 years. 

 

I get the feeling that Buffett is trying to make this company "idiot" proof.  In other words, the businesses will be so good that it will be tought to screw them up.

 

Yup...exactly!  So much money will be consumed by the likes of BNSF, MAE, Clayton, Netjets, etc. that acquisitions will be few and far between, and investment capital will come slower to the future managers.  Sokol will watch the operating companies, excluding insurance, and will be given the CEO title.  Jain will be made COO of the insurance companies...where he's happiest and is allowed to just continue doing what he is doing.  Todd Combs and the other future investment managers will continue to invest capital.  Howard Buffett will be the figurehead Chairman.  Bill Gates will run the board with the other long-time friends of Berkshire.  How can you really screw it up?  Cheers!

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Guest Bronco

You could have a Tommy Boy scenario where Howard Buffett is wooed by Brooke Burke. Burke, of course, would really be the love interest of Martin Sullivan.......

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A company with $30B in float, and growing, largely built on various forms of low probability, high severity lines will never be idiot proof. Ajit Jain possesses huge leverage against Berkshire Hathaway.

 

This is a fair point...a huge insurance business is always going to have some black boxness (to coin a phrase).  I'd like to hear more about the next level of people at the BHRG that Ajit runs -- though I get the feeling it is a small team.

 

But, most of the float that Jain has built up there in recent years comes from the finite deals.  These produce relatively steady underwriting losses and the deals run on for a long time.

 

Meanwhile, the big underwriting gains come from deals that are short-term in nature -- hurricane insurance only runs for a season.

 

Still, I agree that Berkshire will always have to be "watched" and can't truly be idiot-proofed.  But, I think Parsad's general vision of a post Buffett era is likely correct and it will likely work out pretty well.

 

I am very encouraged that with the Lubrizol deal, it looks like the BNSF deal wasn't a one off for a public company.  If Buffett can continue to close deals to buy out public companies, this is getting interesting.  Perhaps there are more CEO's of public companies that find the idea of no longer dealing with Wall Street and having access to a huge pool of capital to grow their business and compete against other players than I thought.

 

I mean, before BNSF and Lubrizol, the only big deal for a public company was Gen Re.  There was GEICO 16 years ago -- but Buffett owned half of it already.

 

 

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