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Warren Buffett stays mum on successor

March 1, 2013: 4:13 PM ET

In the annual horse race, Buffett gives few clues about who will be Berkshire's next CEO.

Warren BuffettFORTUNE -- Warren Buffett still isn't saying who will be the next CEO of Berkshire Hathaway.

In his annual letter to shareholders, which was released on Friday afternoon, Buffett reveals nothing new about the plan for Berkshire Hathaway (BRKA) when or if the 82-year-old executive retires. In fact, the only section in which Buffett talks about who will run Berkshire in the future comes at the very end of the annual report, pages 100 and 101, and is nearly word-for-word the same as a year ago, as it has been for the past few years. The only difference is the number of employees who work at Berkshire. It is now 288,000, up from 270,000 a year ago.

In the section, Buffett, as he has written in the past, says his plan for what will happen when he leaves Berkshire is to split his job in two. One person will become the CEO of Berkshire's operating company. Another person or two will be left in charge of managing Berkshire's investment portfolio. In past year or so, Buffett has recruited two money managers, Todd Combs and Ted Weschler, to help run Berkshire's portfolio. Most people assume those two will take on the latter role.

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But it appears Buffett's pick for the CEO of the company's operations and the head of investments isn't totally decided. Buffett says, were he to leave the company immediately, the board of directors knows his picks for the both positions. He says the candidates "work for or are available to Berkshire." But Buffett still says the ultimate pick is not decided. He says his eventual successor may change based on when Buffett exit the company.

Berkshire's succession planning became an issue after Buffett announced last April that he had been diagnosed with stage 1 prostate cancer. It is believed that Buffett went through treatment for the cancer and has come out fine. Buffett says nothing about the status of his cancer in the letter. But he does say that he has never felt better.

Still, there might be some clues to who Berkshire's successor may be in the annual letter. Each year, Buffett praises certain managers of his individual businesses. Close Buffett watchers often comb through those words of praise for clues. This year it's hard to tell which way Buffett is leaning.

Many people believe Ajit Jain, who runs Berkshire's largest insurance division is the obvious choice to be Berkshire's next CEO. This year Buffett sings Jain's praises again. He writes, "If you meet Ajit at the annual meeting, bow deeply." But Buffett this year spends a good deal of time talking about Geico and it head Tony Nicely.

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Hurricane Sandy cost Geico $490 million in claims. The company had insured 46,906 cars that were destroyed in the storm. Nonetheless, Nicely managed to boost Geico's profits in 2012. Says Buffett, "I rub my eyes when I look at what Tony has accomplished."

Still, at 69-year-old, Nicely is generally considered too old to be Buffett's top choice for the job.

Two other executives, both younger, Matt Rose, head of Berkshire's railroad company BNSF, and Greg Abel, at Berkshire's utility company MidAmerican, have also in the past been talked about as possible successors. This year, Buffett calls the two managers both "outstanding" and "extraordinary." But they get lumped into the same paragraph, and Buffett doesn't really make a distinction between the two. Could mean something, or maybe not. Only Buffett knows.

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About This Author
Stephen Gandel
Stephen Gandel

Stephen Gandel has covered Wall Street and investing for over 15 years. He joins Fortune from sister publication TIME, where he was a senior business writer and lead blogger for The Curious Capitalist. He has also held positions at Money and Crain's New York Business. Stephen is a four-time winner of the Henry R. Luce Award. His work has also been recognized by the National Association of Real Estate Editors, the New York State Society of CPA and the Association of Area Business Publications. He is a graduate of Washington University, and lives in Brooklyn with his wife and two children.

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