Post-Buffett Berkshire Hathaway still "attractive"

Even when Chairman and CEO Warren Buffett steps down from leading Berkshire Hathaway the investing conglomerate remains an "attractive" investment for the foreseeable future, according to Morningstar.

"We think that the groundwork for a successful transition has already been in the works for the past 15 years," wrote senior stock analyst Greggory Warren in a recent Morningstar Institutional Equity Research report, "with Berkshire dedicating more and more capital to companies that could absorb the cash flow thrown off by its disparate operations, either through capital expenditures or bolt-on acquisitions,"

Wall Street has begun to "focus on what Berkshire will look like" upon the departure of Buffett, who is 86, and Berkshire vice chairman Charlie Munger, 92, Warren writes in the 136-page report, out last week and first reported on by CNBC.

"Berkshire will survive the departure of Buffett and Munger," he writes. "New management will, however, have to prove itself."

Among the possible successors: Ajit Jain, who runs Berkshire Hathaway Reinsurance Group, and Greg Abel, chairman of Berkshire Hathaway Energy.

"We believe Jain is the first name on the board of directors' list for the position, but think that Berkshire would likely be better served longer term by having him focus on overseeing the entire insurance business, and have Abel—who will work closely with Jain, as well as (Berkshire managers) Ted Weschler and Todd Combs—focus on properly allocating Berkshire's capital," Warren wrote.

So far this year, Berkshire Hathaway has outperformed the Standard & Poor's 500 stock index with its A shares (BRK.A)  and B shares (BRK-B) both up about 13%, while the S&P 500 is up about 7%.

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