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March 06, 2006
Buffett's Annual Blog
Few annual reports are as eagerly anticipated or as closely read as those of Berkshire Hathaway. Indeed, waiting for the latest word from the legendary investing wizard Warren Buffett is, in many ways, on par with waiting for the latest installment of the legendary boy wizard Harry Potter. (Seriously, JK Rowling when is the next book coming out?)
Well, Buffett's annual blog was out this weekend--and as usual, it was a juicy read. Some of the biggest news was that the Oracle of Omaha and the Berkshire Hathaway board of billionaires finally announced they have a succession plan.
According to the annual tome, Buffett and his board vetted three inside managers and "unanimously" agreed on a candidate. Of course, hedging his bets, Buffett writes: "The directors stay updated on this subject and could alter their view as circumstances change--new managerial stars may emerge and present ones will age." In short, the person they picked today could change tomorrow.
If I were a gambling woman (and well, I'm really not), I would put odds on GEICO CEO, Tony Nicely. The insurance group had a tremendous year. As Buffett points out, GEICO improved its productivity by 32%. And he credits GEICO's performance this year for Berkshire's overall strength in insurance, despite a "disaster-ridden" year plagued by such tragedies as Hurricane Katrina. And hey, I really like the GEICO gecko.
Other contenders would be Ajit Jain of National Indemnity; Joseph Brandon of reinsurer General Re; David Sokol of MidAmerican Energy Holdings; and Rich Santulli of NetJets Inc.
Although, Buffett has long said he has confidence in Jain and Brandon--sentiments he essentially reasserted in the annual report--both groups have gotten ensnared with regulators. Sokol's done a great job at MidAmerican and energy is an area Buffett sees more opportunity. But insurance is still the name of the game at Berkshire.
As such, I'm banking on Nicely, if only because Buffett gushes over him in his letter to shareholders. Writes Buffett: "If you have a new son or grandson in 2006, name him Tony." Given that investors follow practically every word of advice from Buffett, I wouldn't be surprised if Tony is one of the top 10 baby names of 2006.
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