Billionaire investor Warren Buffett. Photo credit: Wikipedia commons
Billionaire investor Warren Buffett has revealed that he has prostate cancer. The Berkshire Hathaway CEO made the announcement on Tuesday in a letter to shareholders, but said that his condition “is not remotely life-threatening or even debilitating in any meaningful way”.
Despite Buffett’s insistence that he is fit to continue, the statement has commentators questioning the future of the $201 billion company, particularly as the 81-year-old opted not to name his future successor as chief executive. The Los Angeles Times reported that Berkshire stock fell briefly on the day of the announcement, but rallied in after-hours trading.
The importance of Warren Buffett. Known as the Sage of Omaha, Buffett has spent fifty years at the helm of Berkshire Hathaway, which is, as The New York Times pointed out, a highly influential corporation: “With operations that touch nearly aspect of the nation’s economy, it is sometimes considered a proxy for the business health of the United States.” Buffett, America’s second richest man, hit the headlines in 2011 thanks to his outspoken views on making the US tax system fairer. President Barack Obama’s resulting ‘Buffett rule’ bill, which would have seen a 30 percent tax rate for households earning over $1 million, was blocked by the Senate on Monday.
Politico’s Darius Dixon provided a list of ten little-known Warren Buffett facts, including that the billionaire investor plays bridge with Microsoft chief Bill Gates and that his father was a House Republican.
Why make the announcement? “His disclosure is less an acknowledgement of his mortality than of his celebrity,” argued Diane Brady at Businessweek, pointing out that Buffett’s fame means he is under constant scrutiny. Buffett is so inextricably linked with Berkshire that he needs to head off health rumours in order to protect the company: “Any hint that he’s not thriving on a steady diet of steak and Cherry Coke could send Berkshire Hathaway stock plunging if the company’s iconic founder seems at all coy about his health,” Brady wrote.
Hedge fund manager Whitney Tilson told CNBC that he saw no reason at the moment to sell off Berkshire Hathaway shares, despite Warren Buffett’s announcement: “We believe there’s a good chance that Buffett will be running the company for the next 5 years and maybe even the next 10 years and today’s announcement doesn’t change that.”
Succession mystery. Buffett has apparently already identified his successor, but has not revealed the name to the Berkshire board – nor, surprisingly, even to the person he has chosen. Walter Hamilton suggested in The Los Angeles Times that this was an attempt to protect the mystery successor from “a media blitzkrieg”, but that “the cancer diagnosis will put pressure on Buffett to reveal the person’s name”. Motley Fool analyst Joe Magyer told the paper that the succession issue was an ongoing problem made worse by the announcement of Buffett’s condition: “One of the biggest drags on the stock have been questions about succession… Even if Buffett comes out perfectly healthy, it’s going to be a monkey on the back of the stock for a long time.”
Watch an interview with Warren Buffett on his tax opinions below,