Too Soft on Warren?

 | May 06, 2013 | 8:03 AM EDT  | Comments
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Was Doug Kass too soft on Warren Buffett?

I know that one of my favorites, Jason Zweig from the Journal, says some wags offered that view.

Frankly, I think that's nonsense. In fact, this was a terrific exchange if you are thinking about buying Berkshire Hathaway (BRK.A) (BRK.B) or covering your short.

First, Kass did the unthinkable. He actually questioned Buffett's mortality. He actually, without saying it out loud, questioned the notion that Buffett would live forever. No one else has EVER done that.

Think about it. First, Kass made it clear that a lot of the most recent big deals, including the Goldman, GE and Bank of America investments, all of which we wish he had access to, happened because of the imprimatur of Buffett himself. So what happens if Buffett is not at the helm? It is entirely possible that those kinds of seat-of-the pants deals can't happen without Buffett. So why would I want to go long if he isn't there? Or do we presume he lives to 100 and everything is hunkey-dorey.

Second, he asked about putting Buffett's son Howard as executive chairman, given that he has never run a company like this or made material investments. Buffett dismissed Kass totally because he said his son knows the culture. I don't know, I would prefer someone else with experience. That makes me less likely to buy the stock than, say, if Sam Palmisano were to be executive chairman or someone like Leon Cooperman, who knows the company cold (he went with Dougie to Omaha). Maybe someone who knows insurance like Jay Fishman or pipelines like Rich Kinder, or perhaps someone from his excellent board, or maybe a former CEO of Wells Fargo, a big holding.

As far as breaking up the company, the notion that the fifth-largest company in the world should be just this pastiche, if not a mosaic, of unrelated companies wouldn't carry water anywhere other than with Berkshire. Nobody would put these pieces together. No one. It would make no sense. It only makes sense because Buffett put them together. No other exec could do this. NO ONE.

My conclusion? You wouldn't want to buy Berkshire if Buffett weren't at the helm. Not in this condition. Kass nailed it.

I would not be a seller here. I would still be a buyer. Buffett has the power to make this company a better investment as a whole than in parts.

But no one else on earth can pull it off. So my mind would change if Buffett isn't immortal.

Thank you, Doug Kass, for pointing all of this out. It was very brave and yet still very respectful. Not tough enough? If anything they cut to the matter at hand: would you want buy Berkshire Hathaway without Buffett?

I think the answer is "no."

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