The fallout from Tuesday night’s announcement that Warren Buffett has been diagnosed with stage 1 prostate cancer continued Wednesday, with investors and analysts racing to explain its possible implications for the average investor.
The topic most raised was that of Buffett’s successor. Buffett named his son Howard as his possible successor as chairman of Berkshire Hathaway, but a possible CEO has remained a mystery since scandal embroiled David Sokol, Buffet’s No. 2 at the company.
“Last night’s disclosure by Warren Buffett that he has prostate cancer renewed concerns over Berkshire’s succession plans,” Cathy Seifert of the research firm S&P Capital IQ said in a statement. “We think its succession strategy is probably better established than [Berkshire Hathaway] articulates in its shareholder messages.”
However, she sees a two-fold risk in that Buffett could remain at the helm as he ages (although the company may have plans in place to prevent this).
“The shares also currently (and historically) trade at a premium to peers,” she added. “That premium may evaporate when Mr. Buffett’s tenure ends. We keep our $87 target price.”