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https://www.ft.com/content/fd3b3324-d775-4e09-a916...

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

Very interesting read. Subscription required I'm afraid.

Astore

Thanks for the heads up, obviously Buffett aka, brk should be disclosing this info, a very important worthwhile read.

"

Since the pandemic, his protégés’ record has deteriorated. In both 2021 and 2022 they missed the S&P 500 by double digits, according to the FT’s analysis; last year they also trailed the index.

Overall, according to the analysis, the pair have generated an average total annual return of about 7.8 per cent over the past decade. That falls short of the 12 per cent return of the S&P 500 and Buffett’s own 10.2 per cent gain. They have trailed the index in seven out of 10 years.

Their portfolios, worth about $27bn out of a total $354bn, excluding billions of dollars of pension investments for Berkshire’s employees, are up about 113 per cent over the past 10 years.

That trails a 165 per cent gain by Buffett over the same period and a 211 per cent total return by the S&P.

Berkshire declined to put Combs and Weschler up for interview or confirm which trades they made.

“I’ve never felt that it’s in the interest of Berkshire shareholders to talk about anything that we do that is successful and that we want to continue to do,” Buffett told the FT."

I read it for free- and that is what it is worth.

Usual complaining and criticizing of Todd/Ted not beating the SPX. As has been written here ad nauseum we all know Berkshire the stock has not beaten the SPX over the various time periods we can look at, but after taxes it has because of no dividend tax.

Can someone name a time/article where we read something that had something new in it?

When Buffett has something to say it is done at the meeting or the annual report or a press release.

I am a FT home delivery subscriber, and the article didn't make it to the May 1 print edition, so I had to read it online too.

Unlike others, I didn't think it was a hit job trying to get eyeballs. FT is a very high quality financial newspaper, and I thing the article was fair and factual.

I don't see anything wrong in scrutinizing T&T's underperformance over a substantially long period of time. Many BRK investors have wanted such a disclosure, which Buffett has been unwilling to provide. The report cards of many BRK division's like railroad, utilities, insurance etc are disclosed, so why not the investment managers', who are going to be very big contributors to BRK's intrinsic value in the near future. Are they up to the challenge based on their track record - it's a fair question to ask. Maybe Buffett will be prodded into providing it on his own in future.

Here are some snippets from the FT article.

Overall, according to the analysis, which used Morningstar data, the pair have generated an average total annual return of about 7.8 per cent over the past decade. That falls short of the 12 per cent return of the S&P 500 and Buffett’s own 10.2 per cent gain. They have trailed the index in seven out of 10 years.

Their portfolios, worth about $27bn out of a total $354bn, excluding billions of dollars of pension investments for Berkshire’s employees, are up about 113 per cent over the past 10 years.

That trails a 165 per cent gain by Buffett over the same period and a 211 per cent total return by the S&P.

Berkshire declined to put Combs and Weschler up for interview or confirm which trades they made.

“I’ve never felt that it’s in the interest of Berkshire shareholders to talk about anything that we do that is successful and that we want to continue to do,” Buffett told the FT.

He added: “Both Todd and Ted have been invaluable to Berkshire, and our shareholders have profited significantly from their activities.”

"Many BRK investors have wanted such a disclosure, which Buffett has been unwilling to provide. The report cards of many BRK division's like railroad, utilities, insurance etc are disclosed, so why not the investment managers', who are going to be very big contributors to BRK's intrinsic value in the near future."

Count me as one of those investors. I can't see how one wouldn't want this

Up until the Apple purchase, Buffett was most likely behind the SPX. I will stipulate here that while I want better than SPX performance on the equities, it is not a requirement for the Berkshire to do well. KO/AXP have not beaten the SPX over the past 20 years either. USB was a very long time holding of Buffett, it never beat the market, HPQ a Buffett pick/airlines, etc. Buffett's record isn't explicitly broken out, but I submit, nothing too great, yet Berkshire has compounded very nicely.

I am guessing here, but if Ted/Todd primarily manage pension funds, is that the goal necessarily, to beat the index or is it to just do well enough to pay out the distributions.

So, let me pose it this way, let's say they disclose the returns of Ted/Todd and they are not beating the market (which we all kind of know) what will that do for you?

Count me as one of those investors. I can't see how one wouldn't want this

Me either.

If Warren were an outside person considering an investment in BRK, would he want this info? Maybe someone will ask him.

Or does he judge it being not material? He says the 10-K is all we need to know.

It's not like we're asking him what they're buying or selling. Just what confidence can we place in them as his successor in a key part of capital allocation?

(My gut feeling is that his position is - you'll just have to trust me on this.)

"So, let me pose it this way, let's say they disclose the returns of Ted/Todd and they are not beating the market (which we all kind of know) what will that do for you?"

It wouldn't do much for me. What I find satisfying about these hires has been:

1. They were hired when there was no immediate need to fill a role.
2. They both are currently still employed and have not been fired. (Given #1, this is more important than most people would give credit to)
3. They have been given more money to manage not less.
4. They have been given more responsibilities beyond what they were initially hired to do.
5. The CEO is skilled at judging people and capital allocation.

All these makes me not worry about either of them.

jk

The record that the FT has inferred doesn't bother me for the following reasons:

- T&T are just 2 employees working for Berkshire. The person in charge is Buffetr. It's
his decision to use them as he sees fit and in no other company do shareholders "demand" that the chief executive offer individual performance metrics for public discussion.
Their performance assessment is best left to their manager who has the relevant facts to hand,has significant skin in the game and is fairly ruthless.
- The key challenge in Berkshire is capital allocation and management across a conglomerate not "stock picks". How to use T&T after Buffett is a decision for the next CEO.
- The behavioural characteristic that would interest me is actually thinking of the problem by inverting. How often have they their portfolios had permanenent capital losses ? I believe the key risk to Berkshire in the future is actually a capital allocation mistake - most likely in a massive acquisition that unravels and destroys shareholder value for good.
For the next 5-10 years the existing set holdings plus buybacks will keep the compounding maching chugging along at between 8-10% pa even if nothing heroic is done on the investment side. This has actually been the case in the last 5 years though the returns have been better than at least I expected when I was in Omaha exactly 5 years ago for the AGM !

https://www.ft.com/content/809c661a-b9cb-476b-8c63...

Part 2 of the series. This time on insurance and the involvement or Mr. Jain.

"In early 2023, Ajit Jain was weighing Berkshire Hathaway’s exposure to the risk of a devastating hurricane hitting Florida. If its insurance business took on more cover and the upcoming season proved tame, Berkshire would reap a multibillion-dollar windfall. The downside? A potential $15bn in losses if it turned into an ugly year for natural catastrophes. Jain sought permission from his boss, Warren Buffett, to increase the bet. “Warren said yes without even listening to what the numbers were,” Jain recounted to shareholders at Berkshire’s annual meeting last year. With the season ending up a mild one, the decision helped propel the insurance business to one of the best underwriting profits in its history".

I would be more interested in the balance sheets of the investments of T&T. The obsession with annual returns as reflected in stock price is not why I keep money in BRK. I believe in the principle of “buying companies, not stocks” and I assume in the long term my nest-egg is best allocated to solid profitable companies. I assume they have more skill than I do at evaluating and finding them. The vagaries of the market involve an awful lot of noise and I’d rather focus on the goal of long term compounding at a reasonable rate.

The apologists in brkville doing what they do best, for 25 years! Unbelievable, safe travels to those who attend the meeting.

When you get the rare opportunity, 3 or 4 times in a lifetime, to visit the Pie Counter, don’t take a small helping. Charlie Munger’s advice and a rule Buffett & Munger live by. Both have mad TONS of poor investments (avoiding wipe outs) but are batting close to 1.000 on the FEW Pie Counter visits. The ones that move the needle. The lieutenants led the General to the Pie Counter. That’s GENERATIONAL.

If 1 of these lieutenants, as reported, initially invested in Apple and turned Buffett on to this 1 investment…how do you value that contribution? I think a “report card” is silly. The 2 guys combined manage $30 Billion. Yet they moved Buffett to an investment that more than tripled the money they manage. THATS outperformance you could only dream of.

Don’t miss the forest for the trees.

I completely agree with this take. Also, when one listens to the Combs podcast, it is clear to me anyway, that he is well versed in financials. I suspect that it was him that got into Warren’s ear about selling USB and let’s not forget Globe Life too. Would Buffett have sold these without Combs, who knows.

Todd/Ted see Buffett weekly, Todd goes to his house every Saturday. They likely talk stocks. If Buffett learns things from them and then acts and it’s a net positive for Berkshire that’s all we want.

Frankly, I want more Berkshire/Buffett/Ted/Todd bashing in the media, I want Berkshire stock down, let them sop up shares.

The apologists in brkville doing what they do best, for 25 years!

I am not sure about Berkshire's CAGR for the last 25 years, but I think for the last 10 years it might have been around 10% (or a little more)?

Let's compare this with what Cathy Woods says in an interview I am reading this very moment: "Unsere jährliche Rendite liegt seit der Auflegung bei etwa 10 Prozent."
Translation: "Our CAGR since inception is around 10 percent".

Actually I don't care what T&T did or did not do during those years, if they missed opportunities or no. No apologies needed. I simply prefer to get those 10% from a smooth and calm sailing Berkshire instead of Cathy's wild Bronco ride, even thinking in some ways it might be a positive that it's such a giant (and well setup) tanker that neither T&T nor Warren can move the needle as much as Cathy can easily do that with her Ark Invest. May it continue.

" Let's compare this with what Cathy Woods says in an interview I am reading this very moment: "

Good morning, some of you are better than any show I ever saw in Vegas. Buffett and Kathy Woods on the same page ? What next, are you going to ask if I would rather do Naked and Afraid with Rosanne or Jlo ? Come on man.

The S&P 500 is a respectable benchmark and he’s outperformed it by more than double YTD.

I suspect shareholders will be quite happy with the performance. Many of them were made filthy rich long before the bonus added 12% so far this young year.

Not naive cheerleading in my book.

Buffett and Kathy Woods on the same page ?
Maybe because of your dripping sarcasm you didn't get my point, that the returns are numerically "on the same page" indeed - but reached in very different ways?

When rule number 1 is "Never lose money", it doesn't make sense to judge a portfolio by whether it beats the index. I don't know what the proper benchmark should be.

"The apologists in brkville doing what they do best, for 25 years!"

Your failure at understanding their argument does not mean they are apologists. It just means you failed. Take responsibility for your own failures.

Now go have a cookie and take a nap.

In case you are wondering...hclasvegas clutters up other boards with similar nonsense.

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