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Friday, August 17, 2012

Berkshire's Lieutenants Continue to Impact Portfolio

Having had a chance to take a much closer look at the changes that were made to  Berkshire Hathaway's (BRK.A)/(BRK.B) stock holdings during the second quarter, we continue to view the equity investment portfolio at the firm as a work in progress. While Warren Buffett  has had (and continues to have) an outsized influence on the makeup of the portfolio, as time goes on we are getting more and more glimpses of just how his two lieutenants--Todd Combs and Ted Weschler--will approach their own portfolios. With Buffett noting more recently that each of these two managers will be working with a "bank" of around $4 billion each (exclusive of any gains/losses on capital that has already been put to work), which is up from $1.75 billion each at the end of last year and $2.75 billion each at the end of the first quarter, we are seeing a far greater willingness on the part of the Oracle of Omaha to hand over more and more of the investment portfolio than we would have expected this early in the transition. The fact that Buffett has also been willing to sell some of his own legacy holdings in order to fund their stock investment portfolios speaks volumes, in our view, about how much faith he has in these two managers, with him even noting in a recent interview that Combs and Weschler have "terrific talent," and that Berkshire feels "very, very, very good about where we are now versus a few years ago in terms of successor investment management."

Continued: http://news.morningstar.com/articlenet/article.aspx?id=564858

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