Can Berkshire’s Investing Lieutenants Carry the Mantle?

During their recent episode, Taylor, Carlisle, and Brewster discussed Can Berkshire’s Investing Lieutenants Carry the Mantle?, here’s an excerpt from the episode:

Tobias: Let’s go to Berkshire. Berkshire has this huge cash. Didn’t deploy any in the 2020 drawdown. Just now packed to the gills with cash.

Jake: It might be even over $200 billion at this point. If he sells as much Apple, he probably is selling.

Tobias: Should Berkshire pay a dividend?

Bill: Mm. Probably not. They cancel the British-American tobacco dividend crowd, I think is wrong for a number of reasons. But really one big reason is the shareholder base cares very much. Berkshire shareholder base doesn’t care. So, I don’t know why they would change that.

Jake: It’s been taken to vote multiple times over the years and they’ve always turned it down.

Bill: I do think an interesting question is, when Buffett is gone, given the size of the organization, does it–? I’m not saying to have a committee of 10, but can Ted, Todd and a third person. Do you need more than just one or two people to manage some of the capital allocation at that organization, just given your isotope conversation? I know it’s nice to say, “Well, you could change everything if you do it.” On the other hand, maybe institutionalizing it a little is not the worst optimal solution.

Tobias: Do you think that performance is problem?

Jake: I think Greg’s going to be the one who’s actually the primary–

Tobias: Yeah. [crosstalk] allocator.

Tobias and Jake: Yeah.

Tobias: Do you think the performance of those two guys is a problem? They’re obviously a very, very good investor, very smart guys, and it’s not been a very, very long period of time and an unusual period of time, but they’ve lagged the S&P 500. They did it with full grace of God.

Bill: I don’t know how free they feel to be them. So, I would need to ask them that.

Tobias: Run that again. You think they have some constraint?

Bill: No, I don’t even know that it’s a real– I have no idea. They’d probably listen to this and be like, “You’re an idiot.”

Tobias: They’re laughing. [crosstalk] at a board meeting.

Bill: But I just wonder when you’re in that– Buffett is like such a giant that I wonder if you feel as free as you would on your own. I don’t know what the answer is.

Tobias: One of them bought Amazon, that was pretty– I think it’s worked out. I think it was a good buy. I’m not criticizing. I’m just saying that was an off the run purchase.

Jake: I thought they have a little restricted list based on some stuff that they know they can’t buy, just what Buffett’s doing. But otherwise, I don’t think he knows what they’re doing until the end of the month, when he gets a statement of what’s in their Schwab account with $15 billion in it.

Bill: I would say this. If those two can’t do it, I don’t know that anybody can, which is what I’m saying. Like, that’s a-

Jake: Those are big shoes to fill.

Bill: -tall order to add a one person to walk into.

Jake: You got to be the CEO of Geico while you’re doing it?

Bill: Yeah, that’s– Some would argue you might be stretched thin if that was the mandate.

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