Last Call for Resumes: Buffett Will Consider Outside-of-U.S. Co-CIOs

Discussion in 'Wall St. News' started by biggerfish, May 9, 2007.

  1. Tweak those resumes, traders:
    Who will succeed Buffett?
    Billionaire investor likes the cut of Cundill's jib

    David Pett, Financial Post, Tuesday, May 08, 2007

    Warren Buffett says long-time Canadian money manager Peter Cundill has just the credentials he's looking for in a chief investment officer as the search continues for managers of his US$100-billion portfolio.

    Mr. Buffett made the comment during Berkshire Hathaway Inc.' s annual meeting in Omaha in a private conversation with Mississauga, Ont.-based investment advisor Jeff Hull, who, as the producer of a TV documentary on Mr. Buffett's life for the benefit of Girls Incorporated (Big Sisters), a charity run by Mr. Buffett's daughter, was granted special access to one of the world's most popular investors.

    When asked by Mr. Hull whether he would look beyond the U.S. border in his search for a new chief investment officer, Mr. Buffett said he wouldn't rule out a Canadian candidate and, when pressed further, he said, "Someone like a Peter Cundill."

    Mr. Buffett added he is not in negotiations with Mr. Cundill nor is he on a short list of candidates. That said, "if Peter Cundill wanted to be added to the short list, I'm sure absolutely he would be considered," Mr. Hull said.

    Mr. Buffett said during Berkshire's annual meeting that his succession plan is almost completed, with the search for a chief investment officer one of the few tasks remaining. However, he did repeat his assertion that he will not be stepping down anytime soon. With more than 600 resumes in boxes on his desk, Mr. Buffett told Mr. Hull that there are plenty of good money managers out there but it is a rare person who can operate at the level of investment that Berkshire is involved in and still provide maximum value.

    I'm looking for someone who is perfect, he told Mr. Hull. Being right 99% of the time isn't good enough.

    Mr. Buffett is leaning toward a future arrangement that would utilize a committee of three investment officers, similar to the trio of current business partner Charles Munger, Sequoia Fund manager William Ruane and Sandy Gossaman, who invested on Berkshire's behalf in 1969.

    Ideally, he would like one or possibly two people from within Berkshire Hathaway and then someone from outside who sees things differently. He also said he needs someone who can look beyond equities, someone who can handle bonds, foreign exchange and derivatives, he told Mr. Hull, adding that no matter how they choose to invest, the bulk of their compensation will be tied to their three- or five-year performance relative to the S&P 500 index.

    Similar to Mr. Buffett, Mr. Cundill is known as a deep value investor who looks 'to buy a dollar for .50."
    Since he started his flagship, Cundill Value Fund in 1974, the chief investment officer of the Cundill division of Mackenzie Cundill Investment Management Ltd. has averaged a 25-year annual return of 13.9% on the fund as of March 31, 2007 compared with 12.7% for the MSCI World Index benchmark, according to Morningstar.

    Mr. Cundill, who currently oversees 21 funds totalling about $8-billion in total assets, is well known for finding value plays in Japan, a country that Mr. Buffett admitted this weekend is a difficult place to find investment opportunities.

    Photo by Ontario-based investor and Buffett documentarian Jeff Hull