What To Expect As Warren Buffett Battles Prostate Cancer (BRK-A, BRK-B, AXP, KO, KFT, PG, WFC)

Warren Buffett is supposed to be invincible.  Unfortunately the world is finding out that this is not the case.  A disclosure letter came from Mr. Buffett and Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) after the close on Tuesday that is certainly going to overtake many of the key earnings reports this week.  Warren Buffett has prostate cancer.

Investors have every reason to be concerned here that the world’s greatest investor of decades past is going to find himself in a different situation than ever before. There are several things to consider here and they are not all dire for the company.

Stage 1 is the earliest stage and  this was picked up because of a rising PSA rather than because of health problems.  Prostate cancer, if caught early on and without having metastasized, is perhaps one of the most treatable forms of cancer for men.  There is an old saying that many old men will die with prostate cancer but they won’t die from prostate cancer.  Man men do not even get treated because the cancer is often so slow to grow.  If one person can afford to get the best treatment in the world, isn’t it the wealthiest man in the world?  It is still very likely that Buffett will be making media appearances to signal that he feels fine and up to his job AND now up to fighting for his life.

Will this make any difference to any of Berkshire Hathaway’s vast equity holdings?  Almost certainly not.  The core holdings of American Express Co. (NYSE: AXP), The Coca-Cola Company (NYSE: KO), Kraft Foods Inc. (NYSE: KFT), Procter & Gamble  (NYSE: PG) and Wells Fargo & Co. (NYSE: WFC) are unlikely to be touched as they have been core holdings for so long.  Here is a list of the Full Buffett Holdings For Berkshire Hathaway.

Then there is the flip-side.  A daily radiation regimen is not an easy process on anyone, not even on Warren Buffett.  Mr. Buffett noted that his travel schedule will be impacted and it is hard to imagine that he will not really change his daily routine after this treatment starts. Radiation is no walk in the park.  As the treatment gets going, it is very possible that investors will wonder about this perpetual ‘Buffett replacement’ as they have for years.  It is likely that many in the media and the investing community will challenge Mr. Buffett if he does not make better disclosures about his succession plan.

We wish the best to Mr. Buffett and anyone else fighting prostate cancer (and any other cancer)!

A letter to shareholders was released in the form of a personal letter.  Buffett noted as follows:

This is to let you know that I have been diagnosed with stage I prostate cancer. The good news is that I’ve been told by my doctors that my condition is not remotely life-threatening or even debilitating in any meaningful way. I received my diagnosis last Wednesday. I then had a CAT scan and a bone scan on Thursday, followed by an MRI today. These tests showed no incidence of cancer elsewhere in my body.

My doctors and I have decided on a two-month treatment of daily radiation to begin in mid-July. This regimen will restrict my travel during that period, but will not otherwise change my daily routine.

I feel great – as if I were in my normal excellent health – and my energy level is 100 percent. I discovered the cancer because my PSA level (an indicator my doctors had regularly checked for many years) recently jumped beyond its normal elevation and a biopsy seemed warranted.

I will let shareholders know immediately should my health situation change. Eventually, of course, it will; but I believe that day is a long way off.

Berkshire Hathaway shares closed up almost 1.4% at $80.76 on the more liquid B-shares today.  These shares rarely trade at all in the after-hours session and shares are down 1.34% at $79.68 in the after-hours session against a 52-week range of $65.35 to $83.72.

Again, best of luck to Mr. Buffett!

JON C. OGG