A great deal of Berkshire’s future rests on whether Buffett picks people as well as stocks. So far, he has seemed unflaggingly confident in the two he hired to eventually lead investing, Ted Weschler and Todd Combs. Their performance this year should also make Berkshire investors happy. Most of the stocks reportedly owned by the two have risen or soared above the S&P 500, including the airlines stocks Buffett said were “in large part” his decision.
Todd Combs came to join Berkshire (BRK.A, Financial)(BRK.B, Financial) by asking Charlie Munger (Trades, Portfolio) for a meeting, which turned into breakfast, and then a meeting with Buffett, who hired him in 2010. From 2005-2010 Combs ran his own private investment fund, Castle Point Capital, and prior to that had gained experience in Buffett’s forte, insurance. Buffett first met Weschler when the hedge fund manager won dinner with him in a charity auction two years running. In 2011, Buffett hired him away from his successful $400 million hedge fund, Castle Point Advisors.
Buffett soon praised them and their investment performance in 2012, noting that they beat the S&P 500 by double digits and outdid him as well. That year, he raised their investment funds to $5 billion each. In his 2016 letter, he made known their funds under management had increased to $10 billion each.
As far as can be assessed through various speeches and letters, Combs and Weschler have invested in the following companies:
DaVita shares have gained 2.77% year to date, underperforming the S&P 500. Weschler owned stock in DaVita, a kidney dialysis company, in his previous fund, and Berkshire owns 38.6 million shares of the company, amounting to a 19.8% stake. Berkshire shows purchases of the stock primarily in 2011 through 2014. In the past five years, it rose 54%.
General Motors (GM, Financial)
Weschler’s GM, the automaker, has declined by almost a percent so far this year,
He bought 50 million shares of the company, roughly 3.31% of shares outstanding, mostly from 2012 through 2015. Though down this year, GM still has a gain of 57% for the past five years.
Mastercard Inc. (MA, Financial)
Many have speculated that Mastercard was a Combs pick. He began buying its shares in the first quarter of 2011 and owns roughly 4.9 million for Berkshire. Year to date, the stock climbed 18.7%, beat the S&P 500.
Charter Communications (CHTR, Financial)
Either Combs or Weschler purchased 9.4 million shares cumulatively of the company from 2014-2016. Berkshire owns about 3.53% of its shares. The communication services company was another outperformer, rising 17.5% year to date.
Verisign operates in domain names for the internet and internet security services, and was purchased for the Berkshire portfolio by either Weschler or Combs. Berkshire owns 12.76% of the company, or almost 13 billion shares, amassed over 2012-2014. This stock also spent 2017 beat the S&P, gaining 20.5%.
Liberty Media (LSXMK, Financial)
Ted Weschler has reported being behind the Liberty SiriusXM (LSXMK, Financial) buying spree at Berkshire. He reported buying shares over weeks this year as a 10% insider of the company. As of the last buy on May 31, Berkshire held a 8.9% stake in Liberty SiriusXM (LSXMK) and 4.26% of its Liberty SiriusXM (LSXMA, Financial) class of shares. The share classes completed a 16.8% and 15.1% advance, respectively, to date in 2017.
Airlines
Combs and Weschler were not behind Berkshire’s spate of airline buys following the presidential election, but one or both of them did have influence, Buffett suggested. In an interview with Charlie Rose, Buffett said buying them “was in large part my decision.”
Though Buffett has panned airlines after an unlucky bet in the past, Weschler had invested in them in the early 2000s. At his prior fund, he bought and sold shares or American and others that have since been consolidated out of existence. Weschler was also one of the lead investor in a merger between American West and US Airways in 2005, according to The New York Times.
Berkshire’s airlines enjoyed a good year, but most trailed the index. Delta (DAL, Financial) rose 5.5%, American (AAL) 5.8% and United Continental (UAL) 6.4%, as Southwest Airlines (LUV) bounded 18.4%.
