Warren Buffett's Berkshire Hathaway revealed tonight (Monday) that Todd Combs, a 39-year-old hedge fund manager from Connecticut, will "soon be joining Berkshire as an investment manager."
That instantly launches the relatively unknown investor into the spotlight as a leading contender to eventually succeed Buffett as manager, or one of the managers, of Berkshire's vast portfolio.
He's not, however, the only candidate. In July, Charlie Munger told the Wall Street Journal that it was a "foregone conclusion" Chinese investor Li Lu would become one of Berkshire's top decision makers on investments.
In a news release, Buffett is quoted as saying, "For three years Charlie Munger and I have been looking for someone of Todd’s caliber to handle a significant portion of Berkshire’s investment portfolio. We are delighted that Todd will be joining us."
The release says Combs has been managing Castle Point Capital in Greenwich, Connecticut, for the past five years.
Buffett described Combs as an "all-American type" who is not the least bit interested in publicity, an attitude unlikely to shield him from it. Now a resident of Darien, Conn., Combs is by birth a Floridian who graduated in 1993 from Florida State University with majors in finance and multinational business operations.
Buffett also tells Loomis that Combs' investment record during the financial crisis was "pretty good" and Loomis calls his hiring a clear indication Buffett is satisfied with Combs' performance.
According to Loomis, Combs will continue to work out of Connecticut and won't be moving to Omaha.
Combs' Castle Point is described as a long/short hedge fund that takes positions in financial services companies. It began full-scale investing in late 2007, the same year Buffett began his search.
Loomis says it would have "met immediate disaster" during the financial crisis if it had only gone long on financials, but was "apparently saved" by its short positions.
She also notes that Combs "ducked all the most famous disasters," by not going long on AIG, Lehman, Bear Stearns, Citigroup, Washington Mutual, Countrywide, Fannie Mae or Freddie Mac.
That, she writes, is consistent with Buffett's stated intention in his 2007 letterto hire someone who is "genetically programmed to recognize and avoid risk, including those never before encountered."
In its most recent 13-F filing with the SEC, Castle Point lists U.S. Bancorp ($22.8 million), Mastercard ($20.4 million), and State Street ($19.0 million) as its three largest long positions as of June 30. Berkshire also reports holding U.S. Bancorp stock. Its 69 million shares, as of June 30, would have a current market value of $1.6 billion.