Meet Warren Buffett's 39-Year-Old Heir Apparent

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Todd Combs has big shoes to fill. On Tuesday, the little-known hedge fund manager was tapped by legendary investor Warren Buffett to oversee part of Berkshire Hathaway's approximately $100 billion investment portfolio. The hire positions Combs as the leading candidate to succeed Buffett as the company's chief investment officer. Is the 39-year-old upstart up to the task? Here's what business writers are saying:

  • Who Is This Guy? Carol Loomis at Fortune provides some background:

Buffett described Combs as an "all-American type" who is not the least bit interested in publicity, an attitude unlikely to shield him from it. Now a resident of Darien, Conn., Combs is by birth a Floridian who graduated in 1993 from Florida State University with majors in finance and multinational business operations.

Once out of school he worked for Florida's comptroller and later moved to Progressive Insurance, where he was involved in the all-important activity of setting automobile insurance rates. Progressive is an arch-competitor of Berkshire's GEICO.

Combs' direct route to Berkshire began in 2005 when he began to manage Castle Point, a new long/short hedge fund set up to take positions in financial services companies.
  • This Is a Big Responsibility for Combs, writes Shira Ovide at The Wall Street Journal: "The new post now positions Combs, who has managed a relatively small portfolio of $400 million, as a successor to the Oracle of Omaha and his $100 billion nest egg."
  • It's an Unconventional Pick, adds Sam Gustin at Daily Finance:
The appointment of Combs is classic Buffett: Confound the conventional wisdom, and ignore the so-called experts.

Ajit Jain, the Berkshire superstar who runs the National Indemnity business, had long been seen as the front-runner. David Sokol, the hard-driving chief of huge Berkshire subsidiary MidAmerican Energy and recently installed CEO of NetJets, had also been viewed as a top contender.
Mr. Buffett gave Mr. Combs, a former executive of Castle Point Capital Management, perhaps the highest praise he could give someone: He fits Berkshire’s culture.

“I know he’ll be good, but he’s the right type of guy,” Mr. Buffett said. “We don’t want someone who’s trying to figure out if they can make $100 million with us, or $200 million with the next guy.”

Combs’s “value-oriented” investment approach is focused on both long and short investments in financial services, and bets “will play out over several years.” ...The fund had declined about 4 percent this year through September. Castle Point’s fund gained 6.2 percent last year, fell 5.7 percent in 2008, rose 19 percent in 2007 and climbed 13.6 percent in 2006.

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%.
  • Everyone's Been Waiting for This, writes Sam Gustin at Daily Finance:
The three-year search for a successor to Buffett, arguably America's most famous investor, has captivated the financial world. Thanks to a unique combination of homespun wisdom, integrity and consistently outsized investment returns, Buffett has built a fiercely devoted following of fans, thousands of whom gather each year in Omaha, Neb., for Berkshire's annual meeting, also known as the Woodstock of Capitalism.

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