INVESTMENT GURU Warren Buffett has fuelled questions about succession at Berkshire Hathaway, the group he has run for the last 44 years, after revealing a fall in first quarter earnings.

Speaking at the group’s annual meeting in Omaha on Saturday, Mr Buffett said he had three internal candidates in mind to replace him as chief executive and four candidates who could come from inside or outside the company to take over his role as chief investment officer.

Mr Buffett (78) said that if he “drops dead” tomorrow the board of directors knows who will replace him the next day and that they feel “very good about it”.

More than 35,000 shareholders gathered for the annual shareholder meeting following a year in which Mr Buffett said he did not “cover himself with glory”.

Mr Buffett revealed preliminary first-quarter earnings for Berkshire Hathaway were down to $1.7 billion last year from $1.9 billion the year before, and book value dropped 6 per cent a share. He said the company has just under $20 billion in cash on hand.

Of the potential chief executive candidates, Mr Buffett said: “These are people that know how to run big businesses – they are people that run businesses that make many millions or billions of dollars.”

This was not a usual year for Berkshire Hathaway, the conglomerate Mr Buffett has run since 1965. The value-investing guru conceded that he made some poor decisions this year as the company produced its worst performance under his tenure.

Mr Buffett reiterated points he had made in the past, arguing that blame needed to be pointed at all parties – consumers, rating agencies, banks, government and himself – for following models that assumed housing prices would continue to rise forever.

Although he said that the rating agencies deserved blame, Mr Buffett, who owns a stake in Moody’s, said he thinks they will continue to be a good business in the future, even though they are currently under severe pressure.

The same could not be said about the newspaper industry, which Mr Buffett said is eroding quickly and with no end in sight.

He said he will continue to support the newspapers that he owns – the Buffalo News and the Washington Post – as long as he does not see “unending” losses, noting that this was not the strategy taught in business schools, but is part of the Berkshire philosophy.

“For most newspapers in the United States, we would not buy them at any price,” he said.

“Twenty, 30 years ago, they were a product that had pricing power that was essential. They have lost that essential nature.”

Mr Buffett was most flattering about Wells Fargo, the California bank which recently reported record earnings.

“I would love to buy all of Wells Fargo and US Bancorp if we were allowed to do it,” Mr Buffett said.

He dismissed the important of the US government stress tests in helping him assess the banks and said Wells Fargo would prosper no matter what the results show.

“I think I know their future, frankly, better than somebody that comes in to take a look.” – (Copyright Financial Times Ltd 2009)