Berkshire Meeting: Berkshire's Next CEO Needs 'A Money Mind'

Features Dow Jones Newswires

A question from the floor prompts Mr. Buffett to discuss the capital allocation abilities that his unnamed successor must have.

Continue Reading Below

"Capital allocation is incredibly important at Berkshire," he says, estimating with some caveats that Berkshire will generate $400 billion in capital that will need allocating in the next decade. Berkshire's current market cap, for what it's worth, is $411 billion now.

"You need a very sensible capital allocator," he says, "and we will have one."

"It probably should be very close to his main talent," saying that not every very intelligent person has "a money mind."

Mr. Munger chimes in to remind the audience that it's always an option to buy back shares, something that Berkshire has done only rarely in the past. The board approved a repurchase program to buy back shares if they ever fall below 120% of book value, but they have hardly ever reached that threshold.

But that could change, and Mr. Munger assures the crowd that "one way or another, something sensible will be done" with all the cash that Berkshire will generate in coming years.

Continue Reading Below

Click here to see the full live coverage of Warren Buffett at Berkshire Hathaway's annual meeting:

http://www.wsj.com/livecoverage/berkshire-hathaway-2017-annual-meeting-analysis

Write to Erik Holm at erik.holm@wsj.com

(END) Dow Jones Newswires

May 06, 2017 13:27 ET (17:27 GMT)