Warren Buffett released his famous and much-awaited annual letter to investors this weekend. But did he say anything interesting this year?
Absolutely not, says Formula Capital's James Alutcher, also the author of Trade Like Warren Buffett and I Was Blind But Now I See. "What struck me what was not what he said but what he didn't say," he tells The Daily Ticker's Henry Blodget in the accompanying interview.
In particular, Altucher is referring to three key and crucial areas where Buffett left his investors and potential investors in the dark. "I don't know what is going on over there," he says. "He's got no transparency at all."
Citing the following transparency issues, Altucher says he would never buy stock in Berkshire Hathaway (BRK-A):
Berkshire Successor Plans
The biggest news to come from the letter is that Berkshire has chosen its successor.
"Your Board is equally enthusiastic about my successor as CEO, an individual to whom they have had a great deal of exposure and whose managerial and human qualities they admire," writes Buffett.
But by the time the letter ends, nowhere does the Oracle of Omaha give any clue as to who his successor might be. And as it turns out, the successor doesn't even know who they are, as we learned from the Buffett's CNBC interview today.
Of course, this leaves everyone playing the guessing game: Who could be next in line? Will it be Berkshire's very own Ajit Jain or Todd Combs? Or will it be someone less likely and more surprising like J.P. Morgan CEO Jamie Dimon, Altucher wonders.
Why Dimon? Altucher says because Buffett curiously suggests everyone read Dimon's own letter to investors.
"One CEO who always stresses the price/value factor in repurchase decisions is Jamie Dimon at J.P. Morgan; I recommend that you read his annual letter," writes Buffett.
Todd Combs' Performance
Money manager Todd Combs joined Berkshire in 2011 as an investment manager. Many believe he could be the one to eventually take over the company.
While Buffett names Combs in his annual letter and talks about him managing a $1.75 billion portfolio, he does not tell investors how good or how bad Combs has performed, Altucher notes.
"As 2011 started, Todd Combs joined us as an investment manager, and shortly after year end Ted Weschler came aboard. Both of these men have outstanding investment skills and a deep commitment to Berkshire. Each will be handling a few billion dollars in 2012, but they have the brains, judgment and character to manage our entire portfolio when Charlie and I are no longer running Berkshire," writes Buffett.
"Todd Combs built a $1.75 billion portfolio (at cost) last year, and Ted Weschler will soon create one of similar size. Each of them receives 80% of his performance compensation from his own results and 20% from his partner's. When our quarterly filings report relatively small holdings, these are not likely to be buys I made (though the media often overlook that point) but rather holdings denoting purchases by Todd or Ted.
And as Henry points out, Buffett is not one to skimp on praise, which leaves us to wonder just how well Combs' portfolio actually fared.
"More than 98% of my net worth is in Berkshire stock, all of which will go to various philanthropies," writes Buffett.
That's all fine and well says Altucher, but what's an issue here is the fact Buffett does not actually name which specific charities will be in charge of his stock.
Watch the interview to hear James and Henry talk about Buffett's affinity for stocks over gold and cash as well as another topic Buffett is less fain to discuss: his worst investment of all-time.
- Warren Buffett
- Berkshire Hathaway