Warren Buffett acknowledges he won't live forever, tells investors: 'Don't worry'

02/22/2020

What should Warren Buffett do with his billions?

Huntington Private Bank CIO John Augustine discusses what Berkshire Hathaway CEO Warren Buffett should buy next.

Warren Buffett isn’t getting any younger, but the “Oracle of Omaha” doesn’t want Berkshire Hathaway investors to worry: The company will remain in good hands after his death.

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Buffett, 89, plainly addressed his eventual demise and that of 96-year-old vice chairman Charlie Munger in his annual letter to shareholders Saturday, writing that the company is “100 percent prepared for our departure.”

“Charlie and I have very pragmatic reasons for wanting to assure Berkshire’s prosperity in the years following our exit: The Mungers have Berkshire holdings that dwarf any of the family’s other investments, and I have a full 99 percent of my net worth lodged in Berkshire stock,” Buffett wrote. “I have never sold any shares and have no plans to do so.”

Charlie Munger and Warren Buffett (File photo)

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Additionally, Buffett wrote that his will directs that his executors and trustees should not sell any Berkshire shares, and to slowly distribute his stake as non-voting shares to various foundations.

“In all, I estimate that it will take 12 to 15 years for the entirety of the Berkshire shares I hold at my death to move into the market,” he wrote.

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Warren Buffett at Berkshire Hathaway’s annual meeting in May 2019. (AP Photo/Nati Harnik)

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Buffett’s investment strategy has grown Berkshire to a nearly $560 billion valuation. His decades of leadership at the company have made him a legend among investors. But he’s confident that Berkshire will remain a good investment even after he’s gone. Here’s why:

Berkshire’s businesses “earn attractive returns on the capital they use.” Buffett’s big-picture strategy works by smoothing out any individual losses with overall average growth.
Because Berkshire has taken a controlling stake in many of its investments, the company benefits with “some important and enduring economic advantages.” It fully owns businesses including Geico, Dairy Queen, BNSF Railway, Fruit of the Loom and Duracell.
Buffett promises that Berkshire’s finances “will unfailingly be managed in a manner allowing the company to withstand external shocks of an extreme nature.” The company has more than $120 billion in cash and equivalents.
Berkshire’s managers are “skilled and devoted,” according to Buffett. For them, running Berkshire “is far more than having a high-paying and/or prestigious job,” he wrote.
The company’s directors don’t want a typical corporate culture at Berkshire. They “are constantly focused on … the welfare of owners,” he added.

“I myself feel comfortable that Berkshire shares will provide a safe and rewarding investment,” Buffett said, even after his own death.

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