Buffett rekindles successor interest

Legendary investor Warren E. Buffett renewed speculation about who eventually will replace him at Berkshire Hathaway Inc., saying Thursday in his annual letter to shareholders that he plans to hire at least one young investment manager to help succeed him.

To replace Buffett, Berkshire plans to split his job into two parts -- chief executive and chief investment officer. The company’s board of directors approved a plan in October to hire one or more candidates for the job of chief investment officer, so Berkshire will be ready when Buffett can no longer work.

The Omaha-based holding company also reported a 29.2% jump in net income in 2006 because its insurance companies were helped by a lack of hurricanes. Berkshire reported making $11.02 billion in 2006, or $7,144 a share, up from $8.53 billion, or $5,538, in 2005.

Buffett said last year that Berkshire’s board had three outstanding internal candidates for chief executive, and the board knows “who should take over if I should die tonight.” Each of those candidates is significantly younger than the 76-year-old Buffett.

But the “Oracle of Omaha” said this year that Berkshire was not as well-prepared for a successor on the investment side of the business. He said those who might replace him on the investment side were too close to his own age to do it for very long.

Lou Simpson, 70, who manages Geico’s investment portfolio, would “fill in magnificently for a short period,” Buffett said.

Buffett also tried to reassure shareholders about his health.

“The good news: At 76, I feel terrific and, according to all measurable indicators, am in excellent health,” Buffett said. “It’s amazing what Cherry Coke and hamburgers will do for a fellow.”

Morningstar analyst Justin Fuller said Buffett’s plan to seek a younger investment manager made sense.

“It doesn’t necessarily make sense to replace a 76-year-old man with a 70-year-old man, right?” Fuller said