The Valor Blog.
Investment News and Views, Direct from Our Team.

What happens when Warren Dies?

Berkshire has been all about Warren since he took control of the struggling coat lining business.

One day Berkshire will be without its Warren. Whether this is in 10 years, 20 years or tomorrow is unknowable.

Due to our quite concentrated investment in Berkshire, I have received many questions by clients as to what will happen to Berkshire when Warren dies. Many are fearful that the stock will drop.

Whilst in the short term the stock may fall, we are not at all worried about Berkshire after Warren.

Funnily enough, Warrens death may actually be a catalyst for higher earnings per share over the next decade.

Berkshire has enormous spare cash resources. Any reasonable fall in Berkshire’s share price (greater that 15%) will very likely spur a huge buyback for Berkshire. A fall in the price of Berkshire will lead to a rise in the value per share thanks to the buyback.

As Warren often touts, if you own a truly wonderful company and they have the ability to buy back shares, you want the share price to go down not up so that the company can buy back shares at a lower value which will result in higher long-term returns.

Warren, I will shed a tear when you die. You have been a great teacher and role model. When you do, Berkshire will power on thanks to the powerhouse masterpiece that you have built.