Here's What Warren Buffett Didn't Say in His Annual Letter

In Warren Buffett's latest annual letter to Berkshire Hathaway (BRK.A -0.59%) (BRK.B -0.74%) shareholders, the Oracle of Omaha didn't address some of the biggest questions on shareholders' minds. Here's what we didn't hear about, and what you need to know going forward.

A full transcript follows the video.

This video was recorded on Feb. 26, 2018.

Michael Douglass: One of the other big things that we noticed in this letter was, he didn't really address some of the big things that we've been hoping to learn more about, I'd say particular the succession plan. Two of his lieutenants have now been appointed to vice-chairmanships. Ted Weschler and Todd Combs are now managing more money while Buffett and Munger focus on finding investments. But it's still not really clear who's going to take over when our fairly old chairman and vice-chairman decide to retire.

Matt Frankel: I mean, don't get me wrong, I hope Buffett is in charge of Berkshire until he's well into his hundreds. But --

Douglass: But, that's not that far away anymore.

Frankel: It's not that far away. And not only that, he's kind of given indication that he might not want to work until he's that old. He just retired from the Kraft Heinz board, that was a big item in the news this past week. So, he's slowly stepping his role back, including serving on boards like that, managing Berkshire's investments, he's giving more and more leeway to Ted and Todd over the years. There were rumors circulating before the letter came out that there was going to be a big reveal with his succession plan, whether he was retiring, or he would name an actual successor or whatever. But that didn't really happen. There was nothing really new in terms of the succession plan.

Douglass: Yeah. This is one of those things that we're never really going to know, because no one can really know the mind of Buffett. But, Greg Abel is now the vice chairman for Non-Insurance Operations -- Dairy Queen, Brooks, all those other wholly owned businesses for Berkshire. Ajit Jain is now the vice chairman for Insurance Operations. Again, you have Todd and Ted both managing larger portfolios, and then Buffett and Munger focusing on M&A.

The thing is, Insurance, Non-Insurance, Stocks, those are the three key pillars of Berkshire's operating business. It's not really clear whether any one of them will be foremost long-term. It's not clear that Ajit has the inside track because Buffett loves insurance, or that Ted or Todd has it, or Greg Abel, either. It's very unclear what this is going to mean for succession.

Frankel: Yeah. Another thing that I would have liked to hear more color with is this new healthcare initiative that they've been talking about in the news so much, Berkshire's collaboration with Amazon and JPMorgan. I was hoping to hear a little bit more of what their plans are. Why the addition of Teva Pharmaceuticals to his portfolio, did that have anything to do with it? Something like that, and he didn't mention too much about that, or any of his stocks at all, for that matter.

This was actually a pretty short letter for Buffett. It's long in terms of thinking of writing a letter. But, it's 16 pages. I think last years was 27 or 28. They're generally in the 30-page range, and this one was only 16 pages long. But, the healthcare collaboration I would have liked to hear a little bit more info about. He did mention in an interview today that they're actively searching for a CEO for that venture. But, in terms of the how, is what I was hoping to hear.

Douglass: Yeah. It's interesting, because they've been very, very sketchy on details. There have been essentially no details about this venture except that the plan is to bend the cost curve on insurance.

Frankel: Right. How?

Douglass: Yeah, right. You kind of want to know what that means. That said, Buffett has strongly implied a few times at past Berkshire meetings, "If there's a guy I'm not going to bet again, it's Jeff Bezos." And I, Michael, would personally add to that, I generally don't believe in betting against Warren Buffett or Jamie Dimon where possible. So, when all three of them get together, that, I think, says a lot about the potential. Certainly, my perception of Warren Buffett is, he's not really a headline chaser, he's not the kind of person who has to be like, "Yeah, we're going to try to fix this thing and get a bunch of big PR out of something that's not actually going to make a difference." What's that's going to mean long-term, of course, who knows. But I think we will definitely see questions about that at the shareholder meeting this year, which is beginning in May, and I think we will also be expecting to see more in the coming years as well on that.

Frankel: It's worth mentioning, generally, if there is a Buffett surprise that happens at the shareholder meeting rather than in the letter, that's been the case over the last couple of years, that's when he mentioned the dividend for the first time last year, for example. That's something to keep an eye out for as we head toward, I think it's in May this year, it's at the beginning or end of the month, not sure exactly which month it falls into this year, but I think it's May. But, definitely keep an eye out for surprises there. You generally don't see too many surprises in the letter, although there have been a few.

Douglass: Yeah. Saturday, May 5th is the meeting.