2019's biggest investment story that was not told...
Wait! Was Ted Weschler just identified as Berkshire's sole future chief investment officer?
The holiday week press release issued by a subsidiary
These guys are pros.
Before the NYSE open on Monday, December 23, 2019, GEICO— not Berkshire Hathaway — issued a press release:
GEICO announced Todd Combs, one Warren Buffett’s two “lieutenants,” will become CEO of GEICO effective January 1, 2020. In the GEICO press release, Todd Combs was described as “one of Berkshire Hathaway’s investment managers” rather than the customary investment credential of “one of Warren Buffett’s two lieutenants” or an honorific variation.
Despite the importance of the announcement, the announcement was not put on Berkshire Hathaway’s news releases page:
Nor was the announcement filed by Berkshire Hathaway with the SEC (I am not saying it should have been):
Some might interpret the Todd Combs announcement’s staging to be crafted for minimal impact, as if it were stealth PR:
issued by GEICO, not by Berkshire Hathaway;
nine days before effective date;
the first morning of Hanukkah, two days before Christmas;
with many go-to sources out of the office; and,
timed perhaps to force the journalist to lean on the company press release.
No mention of Ted Weschler.
Hmm.
How the press interpreted the announcement
WSJ
Nicole Friedman, the WSJ’s “Warren Buffett/Berkshire Hathaway/insurance reporter”, in her “Buffett Lieutenant to Head Berkshire Hathaway’s Geico Insurance Unit” article, wrote:
The move marks a major responsibility shift for 48-year-old Mr. Combs, one of Berkshire’s two portfolio managers. (emphasis added)
What I would love to know:
Is this “major responsibility shift” an effort to have Todd Combs develop operating experience with the goal of becoming an even better investor?
Or, is this “major responsibility shift” driven by a growing understanding within Berkshire that Todd Combs’ true genius is management and consequently he is being groomed for general management?
Or, is this “major responsibility shift” driven by Todd Combs himself?
The “major responsibility shift” introduces the possibility that Todd Combs is transitioning into general management, notwithstanding the GEICO press release’s statement (see above) that he “will continue to manage $14 billion of investments for Berkshire Hathaway.”
“In addition to making investment decisions, Mr. Combs has taken on a number of projects for Berkshire.”
Key, question; unknown answer: Who is driving Todd Combs’ expansion beyond investing, Combs or Buffett?
Reuters
In his piece “Buffett protege Todd Combs to become Geico CEO,” Jonathan Stempel of Reuters wrote that the position of GEICO CEO was “adding new responsibilities for a man widely seen as a potential successor to Buffett. (emphasis added)”
But later in his piece, Stempel quotes Meyer Shields, a Keefe, Bruyette & Woods analyst, “the longest-tenured sell-side brokerage analyst not to have been so invited” “to pitch questions… at the Berkshire lovefest,” who says:
“I don’t think this is a predecessor to [Combs] being Berkshire’s CEO,” Shields said, referring to the Geico appointment. “There is more experience embedded in Greg Abel, and if he takes over it is good for Berkshire to have a deep bench.”
CNBC
CNBC ran the Reuters story under the CNBC brand. CNBC duplicated these paragraphs that were also in the Reuters’ piece:
But CNBC also added this insight that was not in the original Reuters story:
CNBC is providing granularity that would support the theory that Combs’ main role at Berkshire will continue to be investments while at the same time providing conflicting granularity that would support the theory that he is being groomed for general management, not investments. Likely, it is a fluid situation that will evolve.
Bloomberg
Bloomberg’s Katherine Chiglinsky, who covers “Buffett's Berkshire Hathaway and the world of insurance,” emphasized in her article “Buffett Deputy Combs to Lead Geico While Running Portfolio” that Combs will continue running his $14 billion stock portfolio, in addition to the GEICO CEO duties.
The FT
Eric Platt of the FT, in his article “Buffett puts protégé in charge at car insurer Geico,” affirms that Combs will continue to manage Berkshire’s $14 billion portfolio. Platt also mentions Haven and the JP Morgan board seat. But, most interestingly, Platt chose to feature Edward Jones’ analyst James Shanahan, who said:
“What is surprising most to me is that he has been given the opportunity to serve in an operational capacity [rather] than an investing capacity,” said James Shanahan, an analyst at Edward Jones. “It’s such a senior level at such an important business for the company.”
Business Insider
Theron Mohamed of Business Insider, in his piece “Warren Buffett's likely successor will be Geico's next CEO — here's how he prepared Todd Combs for the role” argues that Todd Combs will succeed Warren Buffett as CEO of Berkshire. A bold argument to make at this point. It could pan out.
Barron’s
Andrew Bary of Barron’s, in his article “Who Will Succeed Warren Buffett as Berkshire Hathaway CEO? There’s Another Rising Star,” weighs in with the assertion that Todd Combs is a newly rising star that could succeed Warren Buffett, adding one more contender to the current duo of Jain and Abel.
What about Warren Buffett’s other lieutenant, Ted Weschler? He will become chief investment officer, I suppose.
Unlike Combs, Ted Weschler has not been publicly identified with non-investment projects such as the Berkshire-Amazon-JP Morgan health initiative called Haven. Ted Weschler is not on a huge company’s board; Todd Combs is on JP Morgan’s board.
As the only one of the two Warren Buffett lieutenants who is fully focused on investing, knowing what we know now (not a lot), Ted Weschler currently seems to be Warren Buffett’s sole investing lieutenant, at least with respect to public investments. Ted Weschler is now Warren Buffett’s presumptive successor as Berkshire chief investment officer (but not CEO).
Ted Weschler is the big, unreported story.
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