Warren Buffett hired Todd Combs in 2010 to help, and ultimately succeed, him and Charlie Munger in managing Berkshire Hathaway’s vast investment portfolio.
But their handpicked heir to the stockpickers’ throne has quit to join JPMorgan. The announcement comes just as Buffett is preparing to step down as CEO after six decades in charge.
Lawrence Cunningham, the director of the University of Delaware’s Weinberg Center and the author of several books about Berkshire, told Business Insider that Combs’ exit was “certainly striking.”
“My impression is that this was not an easy decision for anyone concerned,” Cunningham added.
Business Insider spoke to longtime Berkshire watchers for their read on Combs’ unexpected departure. We also dug through more than 10 years of Berkshire annual letters to see how Buffett’s descriptions of Combs have changed over the years.
Combs and Berkshire did not respond to Business Insider’s requests for comment.
‘We hit the jackpot’
Buffett has heaped praise on Combs and his other investment manager, Ted Weschler, since hiring the two hedge fund managers around 15 years ago.
Combs and Weschler had “proved to be smart, models of integrity, helpful to Berkshire in many ways beyond portfolio management, and a perfect cultural fit,” Buffett wrote in his 2012 shareholder letter, two years after hiring Combs. “We hit the jackpot with these two.”
“Their contributions are just beginning: Both men have Berkshire blood in their veins,” he wrote the following year.
In his 2015 letter, Buffett gave a “personal thank you” to Combs for bringing Precision Castparts to his attention, paving the way for Berkshire to acquire the manufacturing giant for more than $30 billion.
Buffett also entrusted Combs and Weschler with a bigger piece of Berkshire’s portfolio over time. They started off managing about $2 billion of assets each, but were jointly overseeing $34 billion by the end of 2021. Buffett hasn’t provided an update on the size of their portfolios since then.
In 2020, Combs took over as CEO of Berkshire-owned Geico and successfully engineered a turnaround. Buffett shouted him out in this year’s letter, saying he had “reshaped Geico in a major way” and “worked tirelessly in getting the job done,” resulting in a “spectacular improvement” last year.
Steven Check, the founder and chief investor of Check Capital Management, told Business Insider that Combs’ departure surprised him as he’d been “handpicked” by Buffett and had taken on the “huge responsibility” of revitalizing Geico and delivered.
A muted farewell
Buffett struck a more formal tone in the press release on Monday that broke the news of Combs’ departure and other leadership changes.
He referred to his colleague of 15 years, who he once envisioned becoming Berkshire’s chief investor, as “Todd A. Combs” — a sharp contrast to his use of “Marc” for Berkshire’s outgoing finance chief, Marc Hamburg.
Buffett said JPMorgan had “made a good decision” in hiring Combs, but he didn’t mention his personal traits, investing prowess, or other contributions to Berkshire. Buffett only praised Combs for his “many great hires at Geico and broadening its horizons.”
“The rather cool sendoff in the press release implies Warren wasn’t too happy about the departure,” Check, a longtime Buffett watcher, said.
Greater expectations
Before taking over at Geico, Combs played a key role in setting up Haven, a healthcare joint venture between Berkshire, JPMorgan, and Amazon that was launched in 2018 but ended three years later.
He represented Berkshire on Haven’s board and has sat on JPMorgan’s board for the past nine years. He resigned from that post on Sunday ahead of taking up his new role at the bank in January.
Chris Bloomstran, the president of Semper Augustus Investments and a Berkshire shareholder for the past 25 years, told Business Insider that Combs’ roles at Haven, JPMorgan, and Geico suggested he had a “diminished role” in managing Berkshire’s portfolio.
Bloomstran also pointed out that in May, Buffett said Abel would be responsible for Berkshire’s capital allocation, including its stock investments.
“Todd may have aspired to managing more or all of the portfolio, which wasn’t going to happen,” Bloomstran said.
He added that Combs didn’t seem like a “realistic candidate” to succeed Ajit Jain as Berkshire’s insurance chief, given his lack of reinsurance experience.
Abel having “final say” on how Berkshire invests its cash “may have been the impetus for Todd Combs to consider other career options,” John Longo, a finance professor at Rutgers Business School and the author of “Buffett’s Tips,” told Business Insider.
He added that he’s not concerned about Combs leaving, as Weschler is “very capable of managing the equity portfolio.”
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