Morningstar

Berkshire Hathaway: Combs’ Departure Leaves Investment Portfolio Duties in Hands of Abel and Others

Combs’ departure was unexpected but not surprising.

Logotypen för Berkshire Hathaway Inc. visas vid en handelspost på golvet på New York Stock Exchange, 30 augusti 2023.
Richard Drew via AP
Securities in This Article
Berkshire Hathaway Inc Class B
(BRK.B)

Key Morningstar Metrics for Berkshire Hathaway

Berkshire Hathaway BRK.B has reported a few managerial changes, including the unexpected news that Todd Combs would be departing to join JPMorgan Chase, in tandem with CEO Warren Buffett’s retirement at the end of this year.

Why it matters: There was not expected to be much of a brain drain at Berkshire when Buffett retired, given the firm’s culture and the belief that there was no expectation that anyone other than Greg Abel would be taking the helm once Buffett departed.

  • Combs’ departure was unexpected but not surprising. For the past six years, he has been focused more on running Geico and less on managing the more than $30 billion he’s been given oversight of in Berkshire’s $300 billion-plus stock investment portfolio.
  • Combs’ new role at JPMorgan Chase will have him overseeing the strategic investment group for the bank’s new security and resiliency initiative, as well as acting as a special advisor to CEO Jamie Dimon. It will also move him and his family back to the East Coast.
  • Nancy Pierce will take over the top job at Geico, where she currently serves as COO. Ajit Jain, who oversees all of Berkshire’s insurance operations, gave his full seal of approval to her appointment.
  • NetJets CEO Adam Johnson was also appointed president of the consumer products, service, and retailing businesses segment of the manufacturing, service, and retailing operations. He will also continue in his position at NetJets. The remaining non-insurance operations will report directly to Abel.
  • Berkshire also announced that Mark Hamburg, who has served as Berkshire’s chief financial officer for decades, will retire in June 2027. He will be succeeded by Berkshire Hathaway Energy CFO CHarles Chang.

The bottom line: We expect to keep our $765,000 ($510) per Class A (B) share fair value estimates in place following this news, and we view the stocks as slightly undervalued.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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