Buffett to Stay at Berkshire Helm Amid Cancer Fight

SERENA NG And COLIN BARR

WSJ :April 17, 2012, 8:13 p.m. ET

Billionaire investor Warren Buffett on Tuesday disclosed that he has prostate cancer and indicated he will keep running his Berkshire Hathaway Inc. BRKB +1.37% conglomerate as he receives treatment in the coming months.


In a letter to shareholders of the Omaha, Neb., company, Mr. Buffett, 81 years old, disclosed he has stage 1 prostate cancer, an early form of the disease that is treatable. He said he was told by his doctors that his condition "is not remotely life-threatening or even debilitating in any meaningful way."




The Berkshire chairman and chief executive said he received the diagnosis last Wednesday following a routine check and underwent other tests since that "showed no incidence of cancer elsewhere in my body." He expects to begin two months of daily radiation treatment in mid-July, which will restrict his travel "but will not otherwise change my daily routine."


The statement indicated that Mr. Buffett, who has run Berkshire for nearly half a century, doesn't expect to step down from his dual roles managing the conglomerate and overseeing the bulk of its investments. He couldn't be reached for comment late Tuesday.


Medical experts said Mr. Buffett's long-term prognosis is likely good, given that his cancer is in an early stage. Hundreds of thousands of Americans are diagnosed with prostate cancer early, and early forms of the disease are treatable. The American Cancer Society says about 242,000 new cases of prostate cancer will be diagnosed in 2012, and predicts about 28,000 deaths.


But the development may raise more questions about closely guarded succession plans for Berkshire's leadership, a concern that has weighed on the company and its stock price over the past few years. The announcement comes just three weeks ahead of the company's annual meeting, an extravaganza dubbed "Woodstock for Capitalists" that in recent years has drawn crowds exceeding 30,000 for a five-hour question-and-answer session with Mr. Buffett and other festivities.


Mr. Buffett said in February that the company's board has identified an individual to succeed him as CEO and two backup candidates. But he hasn't disclosed the identities of any of the three individuals and has said the would-be successor hasn't been told that he is the leading candidate for the job. Mr. Buffett has separately hired two individuals that he says will oversee Berkshire's more-than-$100 billion investment portfolio after he retires or dies.




Mr. Buffett said in Tuesday's statement that he feels "great" and will "let shareholders know immediately should my health situation change. Eventually, of course, it will; but I believe that day is a long way off."


The news came as a surprise to Berkshire shareholders, but some said they aren't particularly worried.


"We're concerned for him personally but the survival rate for this is virtually 100%," said Whitney Tilson, managing partner of T2 Partners LLC, who says he still expects Mr. Buffett to remain at Berkshire's helm for at least five more years. "It doesn't change the odds of how much longer he's going to run Berkshire, though obviously he's irreplaceable."


Berkshire's Class A shares slipped about 2% in after-hours trading on Tuesday to $119,100 apiece, after rising 1.5% before the announcement, which was made at 5 p.m. New York time. Meyer Shields, a Stifel Nicolaus analyst, said there could be "modest weakness" in the shares on Wednesday amid succession-related uncertainty.


He noted, however, that Mr. Buffett's prognosis doesn't elevate the succession concerns significantly, as the treatment is likely to be successful.


Mr. Buffett has long been in good health, though in 2000, he was hospitalized for several days and underwent an hours-long surgery to remove several benign polyps in his colon. They were discovered during a routine physical examination. These days, Mr. Buffett still says he eats anything he wants, but also has a personal trainer visit his home several times a week to guide him through some light exercise.


On Tuesday, he described his energy level as "100%" and said he feels like he is in his "normal, excellent health."


But as Mr. Buffett ages, speculation about his health and longevity has grown, as have concerns about how Berkshire will be run when he eventually has to step down. The company he transformed from a struggling textile maker into a sprawling conglomerate involved in insurance, railroads, utilities and manufacturing remains closely identified with him and followers are skeptical that any one person, or several, can consistently beat the market the way Mr. Buffett has over four decades.


Berkshire shares are trading near their lowest valuation in decades: close to 1.1 times book value, versus its average valuation of about 1.6 times book value over the past two decades.


—Ron Winslow