Filling Warren Buffett’s Shoes: Can Anyone Do It?

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Warren Buffett is a legendary investor who will never be forgotten, and needless to say, it will be impossible to fill his shoes. Buffett has talked up his top two portfolio managers, Todd Combs and Ted Weschler, in his shareholder letters, noting that their investments have outperformed his in the past.

But no one’s perfect, and as some have noted, including Fortune‘s Stephen Gandel and ValueWalk contributor Dr. David Kass, they underperformed the S&P 500 in 2014. But so did Warren Buffett himself, so perhaps it isn’t so surprising or even as big of a deal as some make it out to be.

Combs and Weschler underperform the S&P 500

Gandel reported that Combs’s portfolio appears to have lost about 0.3% last year, going against Warren Buffett’s top rule of investing, which is never to lose money. Weschler’s portfolio gained 6.7% during the year, although it still wasn’t good enough to beat the S&P 500, which rose a little more than 11% not counting dividends.

This was the first year in which both portfolio managers lagged behind the market index since they signed on at Berkshire Hathaway. In 2013, Combs’ portfolio had gained 51%. Through last year’s second quarter, his portfolio had gained 116% since he joined the firm. Weschler’s portfolio had gained 81% through last year’s second quarter.

But Warren Buffett’s portfolio also appears to have underperformed the S&P 500 in 2014. Wells Fargo was his top holding, and it earned him a tidy profit by gaining 20.7%. However, not all of his holdings did so well. IBM ended the year down by more than 12%, while ExxonMobil shares fell 7% just in the last six months. Buffett himself admitted his investment in Tesco wasn’t a great idea, calling it a “big mistake.”

Where Warren Buffett’s probably successors went wrong

Most of the holdings apparently selected by both Combs and Weschler declined in 2014. Combs’ biggest misstep was Chicago Bridge and Iron, his largest holding last year. The value of the company’s shares was cut in half last year. Viacom lost almost 15%. He did have some bright areas, however, like General Dynamics and Visa.

Weschler’s biggest miss was General Motors, which slipped 15% this past year, although in reality, that could have been a lot worse in light of all the recalls due to the faulty ignition switches.


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