Investors around the world have wondered who would take the reins of Berkshire Hathaway, once 81 year-old CEO and the world's third richest man Warren Buffett passes away. The answer was revealed this late last week, during a "60 Minutes" interview. Buffet revealed that he would turn over command of the world's eighth largest corporation to 57 year-old son, Howard.
Who Is Howard?
It's not uncommon to turn over the family business to a son or daughter, but Berkshire Hathaway is a $300 billion company. Among the 52 companies held by Berkshire Hathaway are well known names like Geico insurance, Fruit of the Loom and The Pampered Chef. This isn't the normal family-owned small business, so son Howard may seem like an unlikely, and possibly unwise, choice to those unfamiliar with the Buffett family, because Howard has no college degree; Howard is a farmer.
The Buffett family doesn't fit the mold of an ultra-high net worth family, however. They don't have the large house in the Hamptons, they've never had a fleet of fancy cars and growing up, son Howard says that they didn't know they were rich. Buffett said that he didn't believe that raising his children as rich kids was best for them. He wanted them to find something that they loved as much as he loves what he does.
After dropping out of three colleges, Howard became a corn and soybean farmer and currently farms 1,500 acres of land in Nebraska. He, like other farmers, takes advantage of government subsidies to assist farmers with short-term credit needs. He has never relied on money from the Buffett fortune to finance expenses of the farm, which include machinery that sometimes costs more than $250,000.
Is He Qualified?
What investors may not know about Howard Buffett is that he is a skilled businessman. He has sat on the board of Berkshire Hathaway since 1993 and holds board seats at Coca-Cola, The Lindsay Corporation and Sloan Implement, as well as previous seats on the ConAgra Foods and Archer Daniels Midland boards.
He also runs the $200 million Howard G. Buffett Foundation, which is committed to improving the quality of life for impoverished communities around the world. Buffett visits an average of 20 countries every year, showing farmers new techniques that will not only improve the quality of their crops, but also the quality of their business. He requires that they learn basic accounting and credit management skills as part of receiving grant money.
Howard will be appointed as an unpaid, non-executive chairman, allowing him to preside over the board but not make operational or investment decisions. His main role, as stated by Warren Buffett, would be to guard the culture of the company, making sure that the shareholder friendly values of Berkshire Hathaway are maintained.
The Bottom Line
During the "60 Minutes" interview, Howard had only one stipulation for his father, when asked if he would accept the position. He said, "as long as I can keep farming." On the surface, he may seem like a simple, uneducated farmer, but don't let that blind you to the possibilities. Howard's upbringing and experience may just be the perfect fit to continue on his father's legacy.
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