The whole story this week was about Todd Combs. The story seemed strange as Combs was unheard of until Berkshire Hathway announced his appointed as an investment officer, earlier this week. However, what got lost in the story was what happened to Li Lu. The day after the news of Combs was announced; Li Lu announced he would no longer be accepting the same position as Combs.
The Wall Street reported as a side point:
The surprise announcement 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.
Originally, we had been following Li Lu on this site even before the news was officially confirmed. We speculated for months that Li Lu would indeed be a future chief investment officer at Berkshire Hathaway.
At the time the Wall Street Journal reported several months ago:
In an interview, Mr. Munger revealed that Mr. Li was likely to become one of the top Berkshire investment officials. “In my mind, it’s a foregone conclusion,” Mr. Munger said.
What was interesting at the time was that neither Buffett nor Li Lu commented on taking the job. However, it can be assumed that if Munger publically announced that Li Lu would become an investment officer at Berkshire Hathaway, Li Lu and Warren Buffett must have agreed to it prior to the public announcement. Yet, it still was bizarre neither Buffett nor Lu commented. After the appointment of combs, both Buffett and Combs confirmed the news shortly afterwards.
So why did Li Lu decide to announce his resignation the day after Combs was appointed. Lu knew he would be splitting the role of an investment officer as Munger announced that at least three people would split the role.
Did Li Lu have second thoughts? Was he disappointed with the appointment of Combs? Was he upset that Combs would manage “a significant portion” of Berkshire Hathaway’s portfolio, something which was never promised (at least publically) would happen?
I have not found any concrete answers to these questions. However, luckily we have a special interview coming up with one of the real experts on Berkshire Hathaway. No it is not Munger or Buffett or anyone that close. However, this man probably is one of the people who know the most about Buffett and his thinking. I am not sure if he is in touch with Buffett, but he definitely has some good sources. Stay tuned as the interview will be posted in the coming days and I asked some interesting questions. I am hoping it will be an exciting interview to read.
Stay tuned….. in the mean time check out Li Lu’s book Moving the Mountain
Disclosure: No position in Berkshire Hathaway