Warren Buffett has chosen who will succeed him as the new head of Berkshire Hathaway, but has not yet revealed the identity of the favoured one to shareholders.
The Sage of Omaha said in his annual letter to shareholders: "Your board is enthusiastic about my successor as CEO, an individual to whom they have had a great deal of exposure and whose managerial and human qualities they admire. (We have two superb back-up candidates as well.)
"When a transfer of responsibility is required, it will be seamless, and Berkshire's prospects will remain bright. "
He said the person would "enjoy a running start" once he and vice chairman Charlie Munger retire.
"Do not, however, infer from this that Charlie and I are going anywhere; we continue to be in excellent health."
Buffett has had a tough year with net earnings attributable to Berkshire Hathaway falling from $12.9bn to $10.7bn. However, book value per share, Buffett's preferred measure, rose 4.6% and beat the total return of the S&P 500 index which was up 2.1%.
Berkshire was hit by the continued slump in the US housing market, which Buffett predicted would start to recover in 2011.
"I was dead wrong," he admitted. "In aggregate, our five housing-related companies had pre-tax profits of $513m in 2011. That's similar to 2010 but down from $1.8bn in 2006." However, he was confident housing will "come back soon".
He also dismissed gold as a valueless asset for the second time this month.
"True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end," he said.
Profits were impacted by a fall in profits from Berkshire's insurance business, following earthquakes in New Zealand and Japan.
Buffett also admitted an error in a $2bn purchase a few years ago of several bond issues of Energy Future Holdings, an electric utility operation serving portions of Texas.
"That was a mistake - a big mistake. In large measure, the company's prospects were tied to the price of natural gas, which tanked shortly after our purchase and remains depressed. Though we have annually received interest payments of about $102m since our purchase, the company's ability to pay will soon be exhausted unless gas prices rise substantially.
"We wrote down our investment by $1bn in 2010 and by an additional $390m last year...In tennis parlance, this was a major unforced error by your chairman."
However, Buffett praised his investment in IBM and purchase of chemical company Lubrizol. He admitted he was "late to the party" with IBM as he had been with Coca-Cola and railroads. He now owns a 5.5% stake in IBM worth $11.8bn at the end of last year.
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