Buffett did not disclose who the next CEO will be in his annual letter to Berkshire shareholders. But he began the dispatch with the succession topic, one that's been a huge issue for shareholders for years.

He then delved into familiar Buffett themes - namely his continued appetite for deals, his preference for stocks over treasuries and gold, and his bullish view on the U.S. economy.

The Omaha, Nebraska, company has said little about who would step in for the "Oracle of Omaha" and the letter contained the most information to date: Buffett made clear there is a chosen replacement for him now rather than a list from which the board could pick.

"Your Board is equally enthusiastic about my successor as CEO, an individual to whom they have had a great deal of exposure and whose managerial and human qualities they admire," he said, adding there were two backup candidates as well.

One Berkshire investor said the nugget of extra clarity was a huge relief, adding he was particularly pleased the issue was addressed at the outset of the letter.

"I think the succession issue is a very big box to be checked off for Berkshire shareholders and maybe even future holders," said David Rolfe, chief investment officer of Wedgewood Partners and manager of the RiverPark/Wedgewood Fund.

While Buffett is in his 80s, he is known to be in good health and has made clear he does not plan to step down from running the company any time soon. But another shareholder said he thinks the level of detail in Saturday's letter signals a change could be coming.

"One could chalk up the explicit details of succession plans as being prudent, but in my opinion I don't think they would have been this explicit about succession unless there was some two- or three-year plan to step down," said Michael Yoshikami, CEO and founder of Destination Wealth Management.

Famous for a poor diet that relies heavily on beef, Buffett joked in the letter that he could consume another 12 million calories before death.

Buffett also retold the tale of one-time business partner Rose Blumkin, who sold Buffett a stake in the Nebraska Furniture Mart when she was 89 but continued working until she was 103.

"After retiring, she died the next year, a sequence I point out to any other Berkshire manager who even thinks of retiring," Buffett wrote.

Buffett, who has been at the helm of Berkshire for 47 years, controls a conglomerate that employs more than 270,000 people worldwide in dozens of businesses ranging from railroads and electric utilities to ice cream and underwear.

JAIN OR PLAN B?

Though the successor's name is not known, the most common guess among Berkshire watchers is Ajit Jain, who runs Berkshire's reinsurance business. As usual, Buffett and his partner, Charlie Munger, lavished praise for him in the letter.

"Charlie would gladly trade me for a second Ajit. Alas, there is none," Buffett said.

In addition to Jain, four other names crop up in speculation on a successor: Burlington Northern chief Matthew Rose, Geico auto insurance boss Tony Nicely, utility company MidAmerican's Greg Abel and reinsurer General Re's chief Tad Montross.

All four are known to have Buffett's admiration, though none are as heavily favored as Jain. Yoshikami said he still thinks Jain is the choice; Wedgewood's Rolfe, however, said Jain's more limited experience may be a drawback.

He said the best candidate would be "the guy who knows the culture and would least affect the underlying business and I think that'd be Nicely."

One name that was conspicuously absent from the letter, though, was David Sokol.

Once one of Buffett's star lieutenants and long presumed to be his successor, Sokol left Berkshire last year amid questions of improper stock trading.

The episode prompted inquiries from securities regulators and was a major black mark on Buffett's track record, but there was no mention at all in his summation of the year.

One investor who has held Berkshire shares for more than 25 years said one can never assume the "choice" of a new CEO is actually final.

"I don't think that there's ever a final checkoff of succession issues. Warren's approach over the years has been to retain the option to select the best person," said Thomas A. Russo, a partner at Gardner Russo & Gardner, one of Berkshire's 10-largest institutional Class A shareholders.

INVESTMENT SUCCESSION CLEARER

The other part of Berkshire's succession plan - who will run its huge investment portfolio when Buffett is gone - is much clearer. The company has hired two investment managers, Todd Combs and Ted Weschler, each running or soon to run nearly $2 billion in assets.

Buffett said in the letter that Combs and Weschler would be capable of running Berkshire's investment portfolio after Buffett is gone. There had been speculation Berkshire might add a third manager down the line.

"Each will be handling a few billion dollars in 2012, but they have the brains, judgment and character to manage our entire portfolio when Charlie and I are no longer running Berkshire," Buffett said.

Combs and Weschler have made a few notable bets already, among them a large stake in satellite broadcaster DirecTV and a more recent position in content company Liberty Media.

Buffett later added that the two would likely help the new CEO make acquisitions down the line.

'ON THE PROWL'

Merger activity was Buffett's major theme in last year's letter, in which he famously said he had a loaded elephant gun to hunt for big deals and an itchy trigger finger.

He satisfied that itch a number of times, most notably spending $9 billion to buy chemical company Lubrizol, $5 billion to backstop Bank of America with preferred shares and $11 billion to become the largest shareholder of IBM.

Buffett noted Saturday he is not done buying, saying Berkshire would like to make large deals to add to operating earnings.

"My task is clear, and I'm on the prowl," he said.

Berkshire ended 2011 with $37.3 billion in cash on hand, even though profits fell in the most recent quarter.

Buffett also said Berkshire would keep making investments in things like solar and wind energy at MidAmerican, as well as in equities and other assets with some sort of output.

He took the chance in the letter, as he often has in the past, to cast doubt on bonds, commodities and currencies as investment opportunities.

"My own preference - and you knew this was coming - is our third category: investment in productive assets, whether businesses, farms, or real estate," Buffett said.

(Reporting By Ben Berkowitz in Boston, additional reporting by Jonathan Stempel; Editing by Eric Beech and Edward Tobin)

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