Warren Buffett and Berkshire Hathaway
Warren Buffett also known as the Oracle of Omaha is probably the worlds most successful investor and has been investing in Berkshire Hathaway since 1962. Berkshire is now one of the biggest companies on the planet thanks to Buffett who acquired the company and is still the CEO at the mature age of 90.
Buffett made Berkshire Hathaway a conglomerate which acquired companies in financial, insurance, clothing, entertainment, food & beverage, utilities, construction and many more sectors. Buffett is well known for being a value investor and has achieved an incredible return of 20% annually since he’s taken over the company so it is no wonder that he’s attracted his fair share of fans.
Since the company has been run by Buffett for close to 60 years it’s understandable that some investors in Berkshire Hathaway are getting cold feet every time a new birthday comes around for Buffett. Unfortunately, he’s not going to live forever and someone else will need to take over the reins. The problem is there’s only one Warren Buffett and his right hand man Charlie Munger is 97 so it’s unlikely he’s going to outlive Buffett by a substantial period of time.
Who’s Going to Take Over and Will the Stock Crash?
There are a lot of questions to be answered surrounding Berkshire when Buffett passes away, what direction will the company go? Who can fill the main mans shoes? Will the company continue to outperform the market over the long run? These unknowns have led people to suggest the stock price could crash when the inevitable happens.
Warren Buffett has said in televised interviews that Berkshire has a plan in place when he goes although there are a lot of rash decisions when it comes to investing and it would be no surprise that many sell their shares in Berkshire creating a self fulfilling prophecy. Ironically, if Buffett was around during this period he would probably buy up the cheap shares at a good price knowing he got a solid deal.
It’s not clear who the next CEO will be although it is believed that Buffetts shares will not be sold for 10-15 years as he doesn’t want anyone to cut and run, it’s still not clear who will own these shares. Ted Welscher and Todd Combs have both been touted as potential successors as they manage a significant portion of Berkshires holdings although it’s just speculation.
Over time Buffett’s ‘A’ shares will be converted into ‘B’ shares before distributing them to charities. Real estate assets will also be liquidated to help offset risk during the transition period.
Warren Buffett is an incredible investor and he has been the driving force behind the success of Berkshire Hathaway for almost 60 years so it is no surprise there are some unanswered questions. The truth is no one knows what will happen after Buffett passes, there will probably be some volatility in the price of the stock but over time this may recover if the new leadership can instil some confidence in investors with a clear path forward.
The views expressed in this post are the authors and should not be construed as financial advice
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