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

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"There is a lot of opportunity out there because rents are down and vacancies are up," says Timothy Parker, president of Hudson Capital Management. With holders of real estate facing a tough year, "I can see [Buffett] going on a bit of a spree and buying up real estate assets."

One possible vehicle for Buffett's move into commercial real estate could be Berkadia Commercial Mortgage, a joint venture of Berkshire and Leucadia National (LUK), Potkul says.

Buying Stocks Mid-Crisis

According to SEC filings from Berkshire, during the market decline of late 2008 and early 2009, Buffett was indeed buying stocks—as he said in a New York Times op-ed at the height of the financial crisis. He opened up positions in ExxonMobil (XOM) and Nestlé (NSRGY), and added to holdings in Wells Fargo (WFC) and Wal-Mart (WMT).

Still, some were surprised he didn't buy more common equity shares—and get more of a pop from the market's explosive rally that began in March. "He didn't go out and just buy a lot of stocks," Wisdom says. Instead, Buffett had cash left over for the railroad acquisition in November.

Buffett is careful not to tip his hand when it comes to his next stock market moves, but Buffett experts look at the past year's buys for clues to 2010.

Berkshire is already heavily tilted toward the financial sector, through its insurance business and through holdings in American Express (AXP), Wells Fargo, Goldman, and others.

As a result, he may be looking elsewhere. "I wouldn't be surprised if he continues to increase his exposure to health care," Famigletti says. "I see a lot of value there," where stocks are relatively cheap but continue to generate cash and significant dividends, he says. Berkshire already owns 1.3% of Johnson & Johnson (JNJ), and has smaller holdings in Unitedhealth Group (UNH), Becton, Dickinson & Co. (BDX), Sanofi-Aventis (SNY) and GlaxoSmithKline (GSK).

Long-Term Prosperity

It's hard to predict what Buffett will do from year to year, because he rarely reacts to the crisis or strategy of the moment.

To many, the purchase of Burlington Northern seemed like an odd move given other, arguably cheaper opportunities in the market. But, Tilson says, "He is buying Burlington Northern to own it forever. He's looking out 50 or 100 years."

For Buffett, the most important task in 2010 won't be reviving Berkshire's stock price or negotiating lucrative but relatively small deals like his Goldman investment. Rather, Buffett has more monumental concerns: In what are probably his last several years at the helm, he is trying to build Berkshire Hathaway into a company that will prosper long after he is gone.

Steverman is a reporter for BusinessWeek's Investing channel.

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