The financial world is abuzz lately regarding Warren Buffett’s possible successors. Ever since Munger announced Li lu will likely be Buffett’s successor many articles on the topic have been penned. However, the media seems to be very confused about what Buffett’s role is at Berkshire Hathway. Buffett is both the CEO, and the CIO (Chief Investment Officer). In these roles, Buffett oversees both the entire Berkshire conglomerate, and the large investment portfolio. The financial media in particular seems to be as confused as everyone else about the topic.
The WSJ recently published a story that compared Li Lu to David Sokol, and analyze which one is more qualified to succeed Buffett ( H/T to Ravi of www.rationalwalk.com for the find). The story weighs the pros and cons of each man taking over Buffett’s role.
The comparison is very misleading. Li Lu is only expected to fill the role of CIO. He would run Berkshire’s multi-billion dollar portfolio. This makes sense due to his spectacular track record. However, Li Lu has no prior business experience, and it is highly unlikely he would be appointed to be CEO, and oversee one of the largest corporations in America. Berkshire is an insurance company that consists of a large amount of other unrelated businesses. Berkshire has a diverse range of businesses including railroads, candy production, retail, home furnishings, encyclopedias, vacuum cleaners, jewelry sales; newspaper publishing; manufacture and distribution of uniforms; as well as several regional electric and gas utilities.
David Sokol on the other hand would be a good fit for CEO. He is widely credited for the spectacular turnabout of Netjets. He has proven himself capable of running a large corporation successfully. However, it is doubtful Sokol would be appointed CIO of Berkshire Hathaway. David Sokol's won the admiration of Buffett due to his superb management, and not due to any specific investments. it is unlikely that Buffett will appoint him officer to oversee tens of billions of dollars of investments.
To summarize; it is likely Buffett will appoint two successors to succeed him. David Sokol will succeed Buffett as CEO, and Li Lu will succeed Buffett as Chief Investment Officer.
Here is a link to the WSJ article: http://blogs.wsj.com/deals/2010/08/03/who-is-the-better-buffett-20-li-lu-or-david-sokol/
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The WSJ recently published a story that compared Li Lu to David Sokol, and analyze which one is more qualified to succeed Buffett ( H/T to Ravi of www.rationalwalk.com for the find). The story weighs the pros and cons of each man taking over Buffett’s role.
The comparison is very misleading. Li Lu is only expected to fill the role of CIO. He would run Berkshire’s multi-billion dollar portfolio. This makes sense due to his spectacular track record. However, Li Lu has no prior business experience, and it is highly unlikely he would be appointed to be CEO, and oversee one of the largest corporations in America. Berkshire is an insurance company that consists of a large amount of other unrelated businesses. Berkshire has a diverse range of businesses including railroads, candy production, retail, home furnishings, encyclopedias, vacuum cleaners, jewelry sales; newspaper publishing; manufacture and distribution of uniforms; as well as several regional electric and gas utilities.
David Sokol on the other hand would be a good fit for CEO. He is widely credited for the spectacular turnabout of Netjets. He has proven himself capable of running a large corporation successfully. However, it is doubtful Sokol would be appointed CIO of Berkshire Hathaway. David Sokol's won the admiration of Buffett due to his superb management, and not due to any specific investments. it is unlikely that Buffett will appoint him officer to oversee tens of billions of dollars of investments.
To summarize; it is likely Buffett will appoint two successors to succeed him. David Sokol will succeed Buffett as CEO, and Li Lu will succeed Buffett as Chief Investment Officer.
Here is a link to the WSJ article: http://blogs.wsj.com/deals/2010/08/03/who-is-the-better-buffett-20-li-lu-or-david-sokol/
Disclosure: None
Also check out:
