Tuesday, April 13, 2010

Does Warren Buffett Have a Surprise for Shareholders, Upon His Death?

Speculation has picked up recently as to who might be a successor to Warren Buffett after he leaves his post at Berkshire Hathaway, whenever that may be.

The more interesting question should be what will happen to Berkshire stock after he retires, or perhaps after his death. He has hinted at a surprise. Here's what I think it will be.

Berkshire will split into two companies an operating company and a mutual fund. All holdings that are publicly traded will go into the mutual fund, giving shareholders an easy way to liquidate that portion of their holdings. The operating companies will remain with the mother ship. Each will be run by separate management teams.

The news of this happening will limit any downside on the departure of Buffett, and focus analysis on the non-publicly traded parts of Berkshire, while giving full value to the publicly traded shares. Further, because these two parts of Berkshire require different skill sets, this will allow the top in both sectors to hold senior management positions.

1 comment:

  1. This sounds more like Munger than Buffet. Based on the fact that Buffet is leaving little to his relatives and giving most of it away thru Bill and Melinda Gates' dissipating and wasteful trust, suggests he has no interest in a strategy that will help those that survive him.