Berkshire after Buffett: can any stockpicker follow the Oracle?

Warren Buffett’s deputies are trailing both their mentor and the market, according to a Financial Times analysis that examined the performance of the two men set to take over Berkshire Hathaway’s $354bn stock portfolio.

Berkshire will hold its annual meeting on Saturday without vice-chair Charlie Munger, whose death in November aged 99 has intensified questions over the future of the business when Buffett, 93, is no longer at the helm.

When the legendary investor eventually steps down, management of Berkshire’s huge equity portfolio is expected to be transferred to Ted Weschler, who was hired after twice paying millions of dollars at charity auctions for lunch with Buffett in 2010 and 2011, and Todd Combs, who was recruited in 2010 after writing to Munger, asking to meet him.

The FT set out to address the biggest questions confronting Berkshire shareholders as they imagine a future without Buffett: how do Weschler and Combs approach investing, are they any good, and can they build on his astonishing record?

This is the first in a series exploring the company and the management team that will one day lead Berkshire into a new era.

Berkshire is the last great American conglomerate, with hundreds of subsidiaries fused with the backbone of the US economy. Its freight trains run over more than 32,000 miles of track. Its utilities provide power to 13mn customers and in Geico it owns one of the largest insurers in the country.

But among the biggest contributors to Berkshire’s performance are stakes in a stable of blue-chip companies including Apple, Coca-Cola and American Express.

Both Combs and Weschler were plucked from relative obscurity to help run this portfolio. Combs’ background is insurance; the 53-year-old got his start at Progressive. An internship with Blue Ridge Capital, one of the “Tiger cub” hedge funds, led to a job at Copper Arch Capital before he we went on to found his own fund, Castle Point Capital, in 2005.

Weschler, 61, started out as a junior financial analyst at WR Grace before helping to start private equity group Quad-C Management, then launching his own hedge fund in 2000.

Like Buffett, they have described themselves as voracious readers, picking through newspapers, trade publications and company annual reports. In 2017 Combs said he got into the office at 7am or 8am and left 12 hours later, spending the day primarily reading. In his previous job he often spent late nights poring over securitisation documents. “So it’s the puzzle,” he said last year. “It’s figuring out the puzzle. That’s where I get giddy.” Weschler has described himself as a reader of “weird stuff” — such as trade publications Furniture Today and Uranium Weekly — in an attempt to gain an edge.

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