Warren Buffett's Doings

Warren Buffett's Doings

Warren Buffett says he supports InBev's takeover of Anheuser-Busch (BUD). Buffett owns 5.7% of BUD and stands to make $600 million if the deal closes. Buffett is set to meet with BUD chief August Busch IV this week. Maybe the sage will get involved through a financing deal, like he did with Wrigley. However he does it, it's a good bet Buffett wants to be involved. The InBev deal would create the biggest brewer in the world. Buffett likes big competitive advantages, and world-dominating scale is a great one.

The world will continue to drink plenty of beer. (I'm doing my part!) So owning the No. 1 brewer should be a pretty good bet over the long term. I'm still short Lehman Brothers in my monthly Extreme Value letter, but maybe I should reconsider. None other than Hank Greenberg, the man who built the largest company (AIG) in the largest business in the world (insurance), says he's buying "a pretty good sized stake," in Lehman Brothers' equity. Greenberg made the announcement last week, after Lehman announced it would raise new equity capital.

At about the same time Greenberg was revealing his investment plans, AIG, the company he built, was getting a new CEO: its chairman, Robert Willumstad. Willumstad contacted Greenberg immediately. The two are scheduled to meet today. Hank Greenberg is to AIG what Buffett is to Berkshire Hathaway, perhaps more so. Buffett is famously hands-off with the managers of his 70+ subsidiaries, many of whom are independently wealthy and run their businesses because they love it.

The issue of Buffett's succession has been discussed widely in the press, but nobody ever talks about Greenberg's succession. AIG's stock has fallen since his 2005 departure, and with good reason. Greenberg, unlike Buffett, is hands-on. It's harder to imagine AIG without him than Berkshire without Buffett. AIG is worth a look. But it's such an enormously complex beast, I doubt it's possible for a single outsider working alone to really get a handle on it.