Tuesday, September 13, 2011

Buffett’s New Hire Is Marathoner Whose BofA Bet Beat Berkshire

Ted Weschler, the hedge-fund manager and marathoner, made money trading Bank of America Corp. stock and held the biggest stake of a bankrupt chemicals firm before being hired by Warren Buffett’s Berkshire Hathaway Inc. 
Weschler bought 2 million Bank of America shares in the first quarter of 2009 when the credit crunch pushed down financial stocks. The shares had more than doubled, on a quarterly average basis, when he sold them a year later. Weschler’s $217 million holding of W.R. Grace & Co., which entered bankruptcy in 2001, dates from at least 2003. 
Weschler, 50, is part of the second generation of Berkshire leaders whom Buffett, 81, is picking to maintain the culture and performance of the firm he built over four decades. Weschler’s bets will get bigger at Omaha, Nebraska-based Berkshire, which holds about $100 billion in stocks and bonds. His investment approach may serve him well under Buffett, who touts his own fondness for reading corporate regulatory filings, said Bruce Kershner, a headhunter who previously worked for Weschler. 
“All he liked to do was read and read and read,” Kershner, president and founder of Bethesda, Maryland-based Kershner & Co., said of Weschler. “He said he took vacations and he would just read his financial statements.” Kershner recruited analyst Bill Beisswanger for Weschler’s fund. 
Weschler and Todd Combs, the former hedge-fund manager hired by Berkshire last year, will assume Buffett’s investment responsibilities when the billionaire chairman retires, Berkshire said yesterday in a statement. Until then, Buffett will oversee the bulk of the portfolio. A third manager may eventually be added to the investment team, Berkshire said. 
Peninsula Capital
Weschler is shutting his Charlottesville, Virginia-based Peninsula Capital Advisors LLC and returning funds to limited partners. He’ll join Berkshire early next year. Peninsula, which had about $2 billion in nine U.S. stocks as of June 30, counted Michael Bills, the former chief operating officer of Tiger Management LLC, among its investors. 
“This is a brilliant move for Berkshire,” Bills, founder and chief investment officer at Charlottesville-based fund of hedge funds Bluestem Asset Management LLC, said in an e-mail. “We are fortunate to have been limited partners with Ted, and think the world of him.” 
Peninsula held stock in Cincinnati Bell Inc., Cogent Communications Group Inc., DaVita Inc., DirecTV, FiberTower Corp., Liberty Media Corp., Valassis Communications Inc. and WSFS Financial Corp. at the end of the second quarter. 
The hedge fund is run in a three-person office, with Weschler assisted by an analyst and an office manager, a person familiar with the business said. It is based in an office above a bookstore in downtown Charlottesville.

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