Buffett's Big Task: Bringing Berkshire Back Up to Speed

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It's not just Buffett's abilities as a manager and stockpicker that have earned impressive returns. It's also his role as the most famous, and most trusted, investor in the world—the man who got countless calls for help and advice from politicians and Wall Street executives during the financial crisis. "He has a celebrity and marquee [name] that opens doors for him," says Wisdom, who owns Berkshire shares.

Whenever Buffett steps down, Berkshire loses that public face.

"Warren Buffett Premium"

Some worry there is a big "Warren Buffett premium" built into Berkshire's stock price, which could be deflated when he leaves.

"The stock will not do well when he steps down or passes away," says Douglas Famigletti, portfolio manager at Griffin Asset Management, though he believes Berkshire's well-managed businesses could continue to prosper. Famigletti's funds own Berkshire shares.

Others, like Robert Cheney, founder and chief executive of Westridge Wealth Strategies, don't see signs of a Buffett premium. He says the stock seems to trade at a reasonable valuation compared to the company's book value.

But the lack of a Buffett premium raises another question, Cheney says: If the stock market already recognizes Buffett is leaving sooner or later, "why hasn't a succession plan been [made] more concrete?"

Several Buffett-watchers say they're expecting more details about Buffett's successors in 2010, if only to ease uncertainty plaguing Berkshire's stock.

Bloomberg BusinessWeek asked Buffett experts what else Buffett might have on his "to do" list in 2010:

Not much, says Wisdom. Burlington Northern "will be the last big acquisition of his career," he says. "He's clearly playing it conservatively because he's already wealthy."

Commercial Real Estate Move?

Digesting the Burlington Northern deal could take some time, says James Potkul, portfolio manager of the Bread & Butter Fund (BABFX), which owns Berkshire shares. For value investors looking for cheap stocks, there are fewer available in today's "fairly valued" market, Potkul says. "It's going to be a very quiet year for [Buffett]."

Berkshire's huge size makes it tough to deploy capital, because it forces him to focus only on large deals that can make a big impact, Tilson says. Instead of reaching for other big deals in 2010, he expects Buffett to focus on rebuilding his cash holdings after the Burlington Northern deal, in an effort to win back Berkshire's top credit rating.

Yet, as the financial crisis showed, Buffett often jumps on opportunities if they come his way. One frequently mentioned area where Buffett can find deals in 2010 could be commercial real estate.

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