New York/Boston: Warren Buffett advanced his succession plan on Monday by naming Ted Weschler, a low-profile hedge fund manager who has produced out-sized returns in the last decade, to help manage the investments of Berkshire Hathaway Inc.
Weschler, 50, will start at the company early next year and work with Todd Combs, who joined Berkshire last year, to manage its equity portfolios. Buffett, 81, has said he may also bring in a third manager, but meanwhile he continues to oversee the lion’s share of the company’s $52.36 billion in US equities.
Weschler, like Combs before him, has succeeded while keeping a low profile far from the canyons of Wall Street.
The Charlottesville, Virginia-based money manager delivered total gains of 1,236% over the last 11 years, according to investors. Over the same period of time, Berkshire’s own Class B shares have risen 84% and the S&P 500 index has fallen nearly 23%.
As of June 30, his Peninsula Capital Advisors had long positions in about $2 billion worth of stock, according to regulatory filings. Combs was managing about $400 million when he was hired.
Since Combs was hired, Buffett has made clear there would be more people added to the investment team to replace him eventually. When and how many, however, have been open questions that have weighed on Berkshire’s stock, some analysts following the stock have said in recent weeks. Some investors say Berkshire shares are currently at their most undervalued in a generation.
A number of Buffett’s best-known biographers, as well as prominent fund managers including Mario Gabelli, all told Reuters Insider they were not familiar with Weschler or his work. The same was true when Combs was appointed last year.
Moments after one of the biggest personnel mysteries in finance was lifted and Weschler was named as one of a likely trio of heirs to Buffett as managers of Berkshire’s investment portfolio, he kept to his usual routine. He was at his desk at Peninsula -- the hedge fund he founded in Charlottesville, Virginia, in 1999 -- dialing investors, his receptionist said.
Weschler’s interest in Buffett, who is both chief executive of the ice-cream-to-insurance conglomerate and its money manager, has been growing for some time.
According to journalist Carol Loomis, a long-time friend of and ghost-writer for Buffett, Weschler paid millions of dollars to dine with the “Oracle of Omaha” twice in the last two years.
Unlike many who bid to have the annual charity lunch with Buffett to benefit anti-poverty group Glide, Weschler insisted on anonymity -- wanting his name to be kept out of the headlines and requesting a change of venue from the New York steakhouse where the lunch is usually held. Instead, Weschler, who bid $2.63 million, met Buffett on his home turf in Omaha.
Over the last years, pressure has mounted on Buffett to put a succession plan into place for the day he will no longer run the company. Buffett’s roles of investment manager will be split after he retires; the names on the CEO succession list are secret, however.
Weschler has overseen a very concentrated portfolio with DirecTV, DaVita, which runs kidney dialysis centers, and Liberty Media, ranking among his biggest and most recent holdings.
In total, he held fewer than a dozen publicly traded US stocks at the end of the second quarter, according to his most recent regulatory filing. He is not required to list stocks he may be shorting or otherwise betting against.
Weschler earned an undergraduate degree in economics from the Wharton School at the University of Pennsylvania, where Buffett began his own undergraduate education decades ago.
Before starting his stock-picking career in Virginia, Weschler worked at specialty chemicals and materials company W.R. Grace, where he at one time was assistant to the vice chairman.
The path for Weschler to join Berkshire was laid at this year’s lunch when Buffett pitched the idea of a move to Omaha, Buffett told Loomis. “I very much wanted him to do it, but I didn’t expect to get very far with the idea,” Buffett said.
“Ted will no doubt make a lot of money at Berkshire. But he was already making a lot of money with his fund -- you can get an idea of that from the size of his (charity) bids -- so money wasn’t a reason for him to come.”
In Charlottesville, a city one-quarter the size of Omaha, Weschler and his wife have supported a number of charities from helping sponsor a youth film festival to donating to one that builds structures for communities in need.