- Combs has been adding duties, got credit for Precision deal
- JPMorgan CEO Dimon credits Combs for wisdom, judgment
Berkshire Hathaway Inc.’s Todd Combs has been named to the board of JPMorgan Chase & Co., helping him build expertise beyond investment management and expanding the ties of Warren Buffett’s conglomerate to the banking industry.
Combs’s appointment was effective Monday, New York-based JPMorgan said in a statement Tuesday. Buffett’s Berkshire is one of the top investors in JPMorgan competitors such as American Express Co. and Bank of America Corp., and U.S. regulators are weighing whether his 10 percent stake in Wells Fargo & Co. violates rules meant to limit the power of insiders.
“It is unusual for any of Buffett’s employees to serve on outside boards, so that’s interesting,” Jason Goldberg, an analyst at Barclays Plc, said in a telephone interview. “While Berkshire doesn’t own JPMorgan shares, Warren Buffett has made comments previously that it’s one of his larger personal holdings.”
Combs, 45, has been taking on a larger role since joining Berkshire in 2010 to manage a portion of the investment portfolio. Buffett credited Combs for sparking Berkshire’s interest in Precision Castparts Corp., one of the billionaire’s largest acquisitions, and named the investment manager this year to the board of the aircraft-parts manufacturer. Buffett has said Combs and Ted Weschler, both former hedge-fund managers, will oversee all of his company’s investments one day, and has also given them oversight roles at other operating subsidiaries.
“This arrangement will save me a minor amount of work and, more important, make the two of them even better investors than they already are,” Buffett, 86, wrote in his annual letter published last year.
Energy executive Greg Abel and Tracy Britt Cool are also among the next generation of leaders at Berkshire who have been given additional duties. Both are on the board of Kraft Heinz Co., the food company that counts Berkshire as its top investor.
JPMorgan Chairman and Chief Executive Officer Jamie Dimon was impressed by Combs on his visits to Berkshire, according to a person familiar with the board decision. The investment manager will be the youngest director on a panel where most members are older than 60. Dimon credited Combs in the statement for wisdom and judgment, and the bank said his committee assignment will be reported later.
“You have someone who thinks like Warren Buffett on your board, maybe someone who one day replaces Warren Buffett,” Mike Mayo, an analyst at CLSA Ltd., said in an interview with Bloomberg Radio. “That doesn’t seem like a bad guy to have on your board of directors -- a long-term thinker, someone who’s really thinking about value, managing for economics, not politics."
Prior to joining Omaha, Nebraska-based Berkshire, Combs worked as an analyst at Florida’s banking regulator and for auto insurer Progressive Corp. He got an MBA at Columbia Business School and eventually started a hedge fund called Castle Point Capital Management LLC in Connecticut. At the fund, he oversaw investments in companies including U.S. Bancorp, Mastercard Inc., Western Union Co. and Chubb Corp.
Berkshire is a major holder in U.S. Bancorp and Goldman Sachs Group Inc. Its American Express stake is valued at about $10 billion, and the Wells Fargo investment at more than $20 billion. Buffett said in 2012 that he had a personal stake in JPMorgan.
Jeff Matthews, an investor and author of books about Buffett, said JPMorgan, the largest U.S. bank, is a natural fit for Combs, partly because of its prestige. If Combs were to join the board of a lender where Berkshire owns a substantial stake, such as U.S. Bancorp or Bank of America, the relationship could raise further questions about Buffett’s influence, Matthews said.
“It’s the class act of big banks, and Buffett thinks very highly of Jamie Dimon,” Matthews said.
Both executives have been vocal advocates for increasing corporate transparency and were among a group of finance leaders who released a report in July urging companies to refrain from short-term earnings forecasts. Buffett didn’t immediately return a message seeking comment Tuesday.
In 2012 and 2013, after JPMorgan posted a trading loss on credit derivatives and worked to settle regulatory probes amid pressure to split Dimon’s dual roles, Buffett expressed his support, crediting the bank for propping up smaller rival Bear Stearns Cos. during the financial crisis.
Buffett, who is highly regarded for his folksy manner and record of creating wealth, has lent support to other banking executives under fire, including Goldman Sachs’s Lloyd Blankfein and Bank of America’s Brian Moynihan. Politicians have been directing their ire for years at the country’s largest lenders for abusive behavior. Wells Fargo agreed this month to pay a record $185 million to authorities after a review found employees may have opened more than 2 million accounts and credit cards without consumers’ permission.
“Perhaps JPM believes that an association with Berkshire Hathaway would be favorable in the current environment,” Jim Shanahan, an analyst at Edward Jones & Co., wrote in an email, using the ticker symbol for Dimon’s bank. “This would only strengthen the perception of JPM and its board of directors, not only in the eyes of investors but also in the eyes of regulators and the media. Due to some recently-disclosed bad behavior by one of JPM’s peers, the timing is impeccable.”
JPMorgan climbed 52 cents to $66.71 at 9:38 a.m. in New York and has advanced about 1 percent this year. Berkshire rose 0.4 percent, and is up about 10 percent since Dec. 31.