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Buffett Hires Hedge Fund Manager Ted Weschler - Yahoo! Finance
One more sign that Buffett’s getting serious about his succession plans. While more posts will soon surface on the internet dissecting Weschler’s past performance, current portfolio holdings, etc. I just wanted to touch on a few key points that might get passed up or barely mentioned.
First, Weschler, like Combs, runs a long/short style where they would bet for or against various assets. it’s interesting that Buffett is sourcing from the hedge fund world when his investment style has become long only and low turnover as his asset size grew. While both Weschler and Combs are extremely sharp and adaptable, it will be interesting to see if their style changes to go long-only or if Buffett is open to letting them short from within Berkshire.
Second, these managers will probably have a generous (but fair) pay package. Replacing Buffett will cost shareholders more money. Warren’s compensation package has held steady at $100,000/year plus personal and home security services which ran around $400k. I’m very interested to see how this change in compensation dynamic at the top will affect the culture of Berkshire down the road. I’m optimistic that the, “What would Warren do?” dynamic can persist for at least a decade after he’s gone.
Lastly, Weschler’s investment style, like Combs’, is highly concentrated. His specialties, based on his latest 13 -F filing shows a concentration in media, telecom, and specialty chemicals. This seems to complement Combs well in the sense that it fills in a huge chunk of the industries that Buffett has historically concentrated on. If I had to guess, I’d think the next manager hired would be someone with a track record in hard-line industrials and manufacturing, or retail products and consumer staples. Once they round out those areas, Buffett’s entire portfolio could be handed over seamlessly, plus you’d have an investment team that could provide input and capital allocation advice to the operation heads at the various Berkie subsidiaries. Not that they need it, but it’s no secret that Buffett leverages his insights from his division heads to make investment decisions, and vice versa. I’d assume that will continue into the future after Buffett’s gone.
