My thoughts on Todd Combs' departure from Berkshire Hathaway; A review of Chinese company Xiaomi's electric vehicle; The 'great sensor debate' between Tesla and Waymo; Data on the safety of self-driving cars vs. human drivers
1) This news initially surprised me – but, upon further reflection, it isn't surprising at all...
One of the two stock pickers at Berkshire Hathaway (BRK-B), Todd Combs, announced that he's leaving for a position at JPMorgan Chase (JPM), as detailed in this Wall Street Journal article (which also mentions that longtime Berkshire Chief Financial Officer Marc Hamburg will step down on June 1, 2026). Here's the most interesting part:
[Greg] Abel, the company's vice chairman and the lead executive of its many non-insurance businesses, will take over as chief executive officer in January. And while he hasn't publicly addressed his plans for Berkshire, Combs's exit suggests Abel is already beginning to put his stamp on the company, including its massive investment portfolio.
There are only two reasons why someone leaves a job: Either they chose to do so on their own, or they were pushed out.
In this case, I suspect the WSJ's speculation is correct that Abel had a hand in Comb's departure. It never made any sense to have two people – Combs and Ted Weschler – doing the exact same job.
If this is, in fact, what happened, we'll probably never know why Abel picked Weschler over Combs. It's impossible to know the performance of their stock picks while at Berkshire because the company doesn't disclose who picked what – though neither has had a big home run like Warren Buffett's pick with Apple (AAPL).
However, I can say that among my Berkshire-junkie friends, there has always been the sense that Weschler is a notch above Combs. Weschler's hedge fund was much bigger and had a better track record than Combs' before both men joined the company.
So, Combs' departure doesn't change my view of Berkshire's future prospects and value.
I am, however, concerned about a risk I've flagged for many years: that Buffett's retirement could lead to a wave of departures/retirements that could impair Berkshire's operations, value, and stock price.
Berkshire's senior employees and managers are all rich. They don't need to work, and many are well past traditional retirement age. (Most famously, Rose Blumkin, founder of Nebraska Furniture Mart – which Buffett bought in 1983, worked until she was 103!)
But they continue to "tap-dance to work," as Buffett does – yes, because they love their jobs, but also because of Buffett himself. By all accounts, he's a pleasure to work for. He's kind, friendly, doesn't interfere or second-guess, and only gives advice when asked. And, of course, there's something special about working for the greatest investor of all time.
As a result, the turnover among the top people at Berkshire over the past half-century has been close to zero. Off the top of my head, I can't think of a single person leaving for another company like Combs is. It's astounding when you think about it.
It's certain that turnover will rise under Abel, so Combs' departure and Hamburg's retirement are just the beginning.
But this isn't necessarily all bad news. Buffett, by his own admission, has undermanaged the massive conglomerate. For example, BNSF Railway has been the slowest in the industry to adopt "precision railroading," which its competitors have adopted to unlock tremendous value.
My guess is that Abel will find a lot of low-hanging fruit to pick that could result in a significant increase in Berkshire's cash flows.
The key questions are a) whether he'll be able to do so without impacting Berkshire's unique and powerful culture, which makes it an attractive place to work – and to sell one's business to... and, related, b) if he'll be able to keep unwanted senior executive departures to a minimum.
I'm optimistic that this will be a successful transition, especially because Buffett will continue to be the largest shareholder, remain on the board, and be available to help Abel whenever necessary.
Abel's main challenge is filling the colossal shoes of a legend. The best analogy I can think of is when Tim Cook took over for Steve Jobs as Apple's CEO on August 24, 2011...
Many questioned whether a low-profile operations guy would be up to the job. But Apple's stock is up nearly 2,000% since then, 4 times the return of the S&P 500 Index:
Given Berkshire's size and modest-growth business, it certainly won't deliver that kind of outperformance going forward. But I remain confident that its stock will somewhat outperform the S&P 500.
2) Tech reviewer Marques Brownlee recently posted a video with a very favorable review of Chinese company Xiaomi's electric vehicle ("EV"). He concluded that it's "a ridiculously good car for the price":
Xiaomi's car underscores the enormous threat every EV and hybrid maker, especially Tesla (TSLA), faces from hundreds of Chinese competitors. They're cranking out amazing cars, with new models and upgrades in record time, at shockingly low prices.
The U.S. market is protected by import barriers and tariffs right now. But I have trouble seeing any scenario in which Chinese companies don't dominate their own market and the rest of the world. If I'm wrong and Tesla does, in fact, withstand this onslaught of competition, it will likely be due to autonomous driving.
Brownlee doesn't pay much attention to the assisted-driving features on the Xiaomi car in his review, so it's unclear how good they are. On the other hand, everything I've heard about Tesla's new Full-Self Driving ("FSD") v14.2.1 is that it's amazing – and a total game changer.
However, despite its name, it is not fully self-driving. It's simply a very good driver-assistance program.
Tesla has yet to show – either with FSD or its nascent robotaxi service in Austin – that it has developed the software or hardware to achieve what Alphabet's (GOOGL) Waymo has: very safe, 100% autonomous driving, with no human safety driver in the car. (See my September 22 e-mail for a video of my first ride in a Waymo in San Francisco.)
I remain skeptical that Tesla will ever achieve full autonomy without light detection and ranging ("lidar") and other sensors. CEO Elon Musk chose to leave these out of his cars, in a bold bet that he could achieve full autonomy using only cameras. Look at the difference between Waymos and Teslas, courtesy of Bloomberg:
Alphabet has invested an estimated $30 billion into Waymo over 16 years and has assembled a team of some of the greatest engineers in the world (some of whom I've met).
They would, of course, love to have a car that's just as safe but much less expensive with only eight sensors rather than 40. But they don't believe it's possible – and, based on everything I've read over many years, I think they're right. (For more on this, see this insightful article from Contrary Research on the "great sensor debate" between Tesla and Waymo.)
To be clear, I'm rooting for Tesla. For the sake of humanity, I hope Musk pulls off another technological miracle that no other company has even dared to attempt... But I think it's likely that he's instead going to fall flat on his face. (I just hope he doesn't get people killed by prematurely removing the safety driver from his robotaxis.)
That said, I would never bet against Musk and his engineers. Again and again, they've achieved many things once thought to be impossible, which is why both Tesla and SpaceX are among the most valuable companies in the world. So I'll repeat what I've long said: TSLA is a bad short at any price.
But if I'm right that Tesla can't achieve full autonomy with cameras only, then it will be just a declining car company for many years to come. If so, its stock has 80% to 90% downside, in light of its extreme valuation (it has a $1.5 trillion market cap and trades at 276 times this year's earnings estimates and 200 times next year's). That's why I named it one of my "Stinky Six" stocks to avoid in my October 29 e-mail.
3) This op-ed in the New York Times – authored by a neurosurgeon who has treated many car-accident victims – underscores the incredible safety benefits from high-capability assisted-driving features like Tesla's FSD and, even better, fully autonomous systems like Waymo's:
Waymo recently released data covering nearly 100 million driverless miles in four American cities through June 2025, the biggest trove of information released so far about safety. I spent weeks analyzing the data. The results were impressive. When compared with human drivers on the same roads, Waymo's self-driving cars were involved in 91 percent fewer serious-injury-or-worse crashes and 80 percent fewer crashes causing any injury. It showed a 96 percent lower rate of injury-causing crashes at intersections, which are some of the deadliest I encounter in the trauma bay.
As someone who rides his bike every day on the crowded streets of Manhattan, I'm particularly happy to see the 83% reduction in "crashes with cyclists or motorcyclists":
Shame on Tesla and other companies for not publicly releasing the same in-depth data. Regulators should require this release before allowing any company's autonomous vehicles to remove the safety driver.
Best regards,
Whitney
P.S. I welcome your feedback – send me an e-mail by clicking here.