From Buffett's heir apparent and CIO of Berkshire to "being tested" and running "a small part of the portfolio" in just a few days.
You'll recall that the original announcement about Combs didn't define the scope of his activities but implied that he would be the next CIO of Berkshire. Buffett told the Wall Street Journal that Combs is "not going to take over the whole investment function as long as I'm around... I have this dual position as CEO and CIO and I will remain in that." The Journal continued: "The surprise announcement came after two candidates—including Chinese-American hedge fund manager Li Lu, and another individual Mr. Buffett was interested in — took themselves out of the running for the job, Mr. Buffett said." Readers of these sentences assumed, appropriately, that "the job" meant that Combs would take over the whole investment function once Buffett was not around.
However, with Buffett you must always be precise and literal in reading his words. He did not say that Combs would become CIO when he was gone. He merely said that Combs would NOT become CIO while he retained the job. He never said what job exactly, Combs had been his third choice for. He never said anything specific about what Combs would be doing. He did say that Combs will oversee a portfolio of a size that Buffett "feels comfortable with" and "scale up until he has a chance to get fully invested." The size and timing could be, literally, anything.
All of this left Buffett plenty of running room to react to the reaction to Combs' appointment. The reasoning behind it, at least as described -- "gut check," he's "All-American," he's enamored of Berkshire, fits with culture, he likes football, etc. -- and Combs' light qualifications played poorly with investors, who were expecting more rigorous qualifications for the person who will be in charge of one of the world's largest investment portfolios. Commentary on the appointment has been almost universally negative.
Now comes Andy Bary of Barron's, who states as fact that: "Combs initially will run a small part of the Berkshire portfolio, with Buffett continuing to oversee all investments. This will let him assess Combs." These facts can only have been leaked by Berkshire. Bary goes on to say that, "In the post-Buffett Berkshire, the CEO is apt to be much more important than the chief investment officer because most of the company's profits now come from more than 60 wholly owned businesses...Berkshire's equity portfolio accounts for about 25% of its stock-market value; now $205 billion. In the mid-1990s, the figure was above 60%. Buffett prefers to buy companies, rather than stocks, because he then controls all the profits, instead of simply getting dividends...IF [emphasis added] Combs does ultimately run Berkshire's investments, big changes are unlikely, partly because longtime holdings, such as American Express, Coca-Cola and Procter & Gamble, have large embedded gains and would incur heavy taxes if sold. Combs also will have to broaden his focus beyond financial stocks."
What a difference a few days make. Suddenly Todd Combs will have to prove himself, learn new skills, and will only run a small part of the portfolio. Besides, the job of investing $10 billion a year of Berkshire cash flow and running a $25 billion portfolio which includes investments that require tricky decisions such as how to time sale decisions given large embedded capital gains, isn't really all that important.