BREAKINGVIEWS - Buffett's new wannabe doesn't have money problems

Tue Sep 13, 2011 1:08pm IST

Berkshire Hathaway Chairman Warren Buffett wanders the company trade show before his company's annual meeting in Omaha, Nebraska April 30, 2011. REUTERS/Rick Wilking/Files

Berkshire Hathaway Chairman Warren Buffett wanders the company trade show before his company's annual meeting in Omaha, Nebraska April 30, 2011.

Credit: Reuters/Rick Wilking/Files

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(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

By Agnes T. Crane

NEW YORK (Reuters Breakingviews) - Warren Buffett tapped another relatively unknown investment manager to help shepherd Berkshire Hathaway's massive stock market holdings. Ted Weschler's investment record is impressive -- returning 1,236 percent in 11 years. But it may have been his attitude to personal wealth that gave him a spot in the relay race to replace Buffett.

Weschler will join Todd Combs and possibly a yet-to-be-hired third manager to oversee part of the equity holdings in Berkshire's insurance subsidiaries. Eventually the troika will run all of the company's equity and debt investments, but they'll have to wait until Berkshire's homespun CEO moves aside to seize the reins more fully.

The appointment comes some six months after David Sokol, a presumed Berkshire CEO-in-waiting, flamed out in an insider trading scandal that sullied the company's squeaky clean image. Sokol's personal front-running of the $9 billion Berkshire takeover of Lubrizol, along with a professed wish to amass a larger fortune, would have still been fresh on Buffett's mind when he sat down with the investment manager at the Glide charity dinner in July.

Weschler had won the annual auction for the second year in a row, spending over $5 million in all to break bread with the legendary investor. To be sure, forking over that kind of cash says many things about the man; but in July 2011 it spoke volumes about the manager's relationship with money. Namely, he was happy to let some of it go for the right reasons, one of which was giving it to charity.

Buffett has pledged to hand his billions over to philanthropic institutions one day. That kind of comfort with wealth could serve Berkshire shareholders well. The company still relies on the integrity of its officers, rather than a rigid overlay of corporate compliance, to maintain its still mostly sterling reputation. When Buffett, and his star power, are gone, trust in Berkshire's officers could be one of the company's most valuable assets.

CONTEXT NEWS

-- Berkshire Hathaway announced on Sept. 12 that it hired Ted Weschler to manage the equity portfolios of the company's insurance subsidiaries. Weschler joins Todd Combs, who joined the company in 2010, as one of the three investment managers who will run Berkshire's entire debt and equity portfolio when Warren Buffett is no longer CEO.

-- Weschler, a hedge fund manager at Peninsula Capital Advisors, paid more than $5 million dollars to have lunch with Buffett in 2010 and 2011 when he won an annual charity auction, according to long-time friend and Buffett ghostwriter, Carol J. Loomis.

(Editing by Rob Cox and Martin Langfield)

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