In 2010, Warren Buffett (Trades, Portfolio) did something he has never done before: he hired a money manager. That year, he hired Todd Combs to manage a portion of Berkshire Hathaway's (BRK.A, Financial) (BRK.B, Financial) giant equity portfolio. A year later, he made another significant change, adding Ted Weschler to work alongside Combs.
Initially, these appointments took the market by surprise. Both of the investment managers are former hedge fund managers, and Buffett has repeatedly criticized the hedge fund industry in the past.
Still, more than 10 years on, it looks as if Buffett is sticking with his decision to hire these managers. Both of the portfolio managers were initially given a $1 billion portfolio to look after. This amount has increased steadily. By 2015, the managers looked after $9 billion as Berkshire's total equity holdings hit $132 billion.
This value has continued to grow. According to the Oracle of Omaha's commentary in his latest investor letter, the duo now has "total authority in respect to $34 billion of investments."
The portfolio expands
This makes it a little more difficult to try and break apart which of Berkshire's investments were acquired by these portfolio managers, and which were acquired by the Oracle himself.
In the past, Buffett has stated that these two managers are allowed to invest in whatever they want, but they have to get his permission if they want to take a holding over a $1 billion benchmark. Considering the total volume of assets they now manage, this benchmark seems low compared to the overall portfolio.
It could be the case that they have a lot more influence over larger positions than they had in the past, which makes it harder to analyze which stocks Buffett likes best and which ones his managers prefer. This is important because Buffett doesn't let his managers talk about their positions.
As he stated at last year's annual meeting:
"I don't want people quizzing them on stocks. They are assets of Berkshire. And just - there's no reason for them to be out educating other people on how to compete with us... we don't really want them going around with people asking them questions about why you like this industry better than that industry or anything of the sort."
On the other hand, he often provides limited commentary on some holdings if he is asked at the annual meeting, or they become so large they warrant a section in the annual report.
The situation is further complicated by the fact that Combs and Weschler manage Berkshire's pension assets. As Buffett notes in his latest annual letter:
"A significant portion of the dollars that Todd and Ted manage are lodged in various pension plans of Berkshire-owned businesses, with the assets of these plans not included in this table."
"This table" refers to the table Buffett includes in his letter highlighting Berkshire's 15 largest equity holdings and their total value.
More responsibility
I think it's likely that Buffett has been giving Combs and Weschler more responsibility in order to help the market get comfortable with these portfolio managers before he departs the business.
Eventually, they will be responsible for managing the entire equity portfolio. When that time comes, we will know for certain which investments they hold. In the meantime, we can only go by the information we have available.
Sometimes Buffett will comment on which one of these managers bought a stock, but more often than not, we can only guess.
Combs and Weschler both have a different style to the Oracle, which is not necessarily a bad thing. However, it could be important to know when analyzing particular investments, and in understanding why Berkshire acquired a certain position.
Sometimes the conglomerate's new investments don't seem like something Buffett would have bought. With Combs and Weschler managing such a large percentage of the firm's assets, that's probably because he had little or no input in the acquisition.
