Update 4:50 PM October 26th. In a shocking announcement it now seems that Li Lu has turned down the position of investment officer at Berkshire Hathaway.
According to the WSJ:
The surprise announcement (that Todd Combs would be an investment officer at Berkshire Hathaway) came after two candidates—including Chinese-American hedge fund manager Li Lu, and another individual Mr. Buffett was interested in—took themselves out of the running for the job, Mr. Buffett said. The emergence of Mr. Li as a contender was the subject of a July page-one article in The Wall Street Journal.
Buffett originally announced that three people would take over his role as Chief Investment Officer at Berkshire Hathaway. Li Lu knew this when Munger announced he would be one of the people to get the job several months ago. So why did Li Lu suddenly announce he is not interested? Was he never interested in the job, or did he suddenly decide to drop out maybe because he does not like Todd Combs? I have no idea just speculation here. I will try to do some investigative research into the topic to come up with more answers.
I also wonder who the third candidate was. Buffett recently announced his three favorite investors are Li LU, George Alexander of Sequia Fund, and legendary value investor Seth Klarman. Alexander likes to be very low key so I doubt that Buffett really thought he would take the job. Klarman runs a $20 billion hedge fund and I doubt he plans on giving that up. Especially since he now has closed the fund and it is unlikely he would want to manage Buffett’s portfolio which is five times the size. Buffett knows all this and likely never even approached the Klarman or Alexander.
Stay tuned as more updates become available on this increasingly surprising development.
This is breaking news I will post more tonight or tomorrow as more information becomes available.
Today Berkshire Hathaway announced that Todd Combs of Castle Point Capital will become an investment officer at Berkshire Hathaway.
Bloomberg is reporting that Combs will be managing a “significant portion” of the investment portfolio. It seems that Combs and Li Lu will both be running the investments of Berkshire Hathaway, while David Sokol is expected to be the next CEO.
Bloomberg is also reporting that:
Castle Point is a Greenwich, Connecticut-based hedge fund focused on financial services companies.
USB is a holding of Buffett and the largest holdings of Combs. There are similarities already, or it could be a coincidence. Combs seems to have a strong background in financial companies which make up approximately 50% of Berkshire Hathaway’s operations. Combs also owns a lot of big companies which is a plus because when he is managing Berkshire’s portfolio he will only be dealing with companies with a large market cap due to the size of Berkshire’s portfolio.
According to CNN:
A study thatFortune made of Castle Point’s13Fs from the first that it filed, for Dec. 31, 2007, through its most recent, for June 30, 2010, shows Combs to have been an active trader with good instincts at one important juncture.
All told, he had long positions in more than 80 different stocks in that 30-month period. A buy-and-hold man he was not: Among his stocks, only one stayed in the portfolio for the entire period, that was United America Indemnity, a Nasdaq insurance and reinsurance company registered in the Cayman Islands until recently and now renamed Global Indemnity (GBLI) and registered in Ireland. From the end of 2007 until the end of June this year, this company’s stock fell by 58%.
In addition, CNN reports that Castle Point is ong/short hedge fund set up to take positions in financial services companies. So this would add some fresh ideas to Berkshire which currently only holds stocks long.
Is this due to any change in Buffett’s health or was this a planned announcement? Only time will tell.
The full release is below:
Breaking news stay tuned for updates