It’s high times for Warren Buffett and investors in Omaha, Neb.-based Berkshire Hathaway Inc. (NYSE:BRK.A), the conglomerate Mr. Buffett has managed for the past 50 years. Shares of Berkshire Hathaway recently hit an all-time high above $193,000 and have posted an annual return of 21% for its half century. Its market capitalization is close to $313 billion, making Berkshire Hathaway the fifth-largest publicly traded company, after household names Apple Inc. (Nasdaq:AAPL) of Cupertino, Calif., Irving, Texas-based Exxon Mobil Corp. (NYSE:XOM), Google Inc. (Nasdaq:GOOG) in Mountain View, Calif., and Microsoft Corp. (Nasdaq:MSFT) in Redmond, Wash.

Mr. Buffett, 83, is also the most beloved investor in American history. Unlike the suits on Wall Street who crippled the economy in 2008 by gambling on the housing market with leverage and derivatives, he is a folksy, homespun capitalist. Berkshire Hathaway owns businesses Americans understand, including a railroad, BNSF; GEICO, the second-largest auto insurer with that cute little gecko for a mascot; and half of Heinz, the food company whose Ketchup and condiments are in many Americans’ refrigerators.

Berkshire Hathaway controls more than 80 companies: eight of those, along with the half stake in Heinz, would make the Fortune 500 as stand-alone companies. With an 8% stake, Berkshire Hathaway is the largest single shareholder of Atlanta’s The Coca-Cola Co. (NYSE:KO). And Mr. Buffett believes in the companies Berkshire Hathaway owns; he was sipping from a bottle of Cherry Coke over the weekend during the question-and-answer period of Berkshire Hathaway’s annual meeting for shareholders.

Dubbed “the Woodstock for capitalists,” the gathering draws 37,000 annually and is held in an arena in downtown Omaha.

Succession Planning

But recently there have been a few murmurs of dissent to Mr. Buffett’s strategy for Berkshire Hathaway, of which he is chairman and CEO. With the stock market continuing to bump up against its record highs, it’s harder for Mr. Buffett to deploy his more than $45 billion mountain of cash on attractively priced, big deals.

To land a company that would affect Berkshire Hathaway’s balance sheet, he would have to spend tens of billions and perhaps increase the typically modest level of debt the company takes on for such deals. Mr. Buffett is currently facing stiff competition for such potential targets such as Battle Creek, Mich.-based Kellogg Co. (NYSE:K), the cereal maker he reportedly has a taste for which sports a $23.5 billion market value. Private equity funds and hedge fund managers, which have strengthened their balance sheets since the credit crisis, are chasing the same mega deals and also scouring the market for bargains.

Better Off On Their Own?

Indeed, will future Berkshire Hathaway annual meetings turn from all-out capitalist raves into bad trips, particularly as each year passes and the question of Mr. Buffett’s successor becomes even more pressing? With Berkshire Hathaway’s growth slowing, does the company have more future value to shareholders as a giant conglomerate or as a bunch of broken-up, smaller and more nimble pieces?

Berkshire Hathaway investors posed that question directly to Mr. Buffett last weekend in Omaha, and the famed Oracle of Omaha batted that notion aside. The company would continue to benefit from taking profits from Berkshire’s stable of slower growing businesses and moving those profits to faster growing, smaller units. Smaller companies have no such ability to reallocate capital.

“Berkshire is worth more as presently constituted than in any other form I can conceive of unless we engage in something to de-tax the whole place,” he said. “There is no advantage to breaking Berkshire into pieces. It would be a terrible mistake.” And Berkshire may spend up to $50 billion for an acquisition, Mr. Buffett suggested, an amount double what most analysts on Wall Street expect.

Despite Mr. Buffett’s declarations, Berkshire Hathaway has seen its growth slow. The company’s book value per share grew close to 25% a year during its first 34 years but has increased at about 9% per year since, according to Jonathan Brandt, an analyst with Ruane, Cunniff & Goldfarb, an investment house. And after decades of outperforming the S&P 500, Berkshire’s book value over the past five years has fallen behind the index.

The Bottom Line

As noted, Berkshire Hathaway and Mr. Buffett are at the pinnacle of success. And that’s when business leaders have to be the most wary. Five to 10 years from now, Berkshire Hathaway shareholders will likely look back and wonder whether the company missed an opportunity to return an enormous amount of wealth and value during a stock market and M&A boom by decoupling its myriad, disparate businesses. Such a process would take years, of course, but Berkshire Hathaway’s next CEO, who will not be as beloved as Mr. Buffett, will likely be faced with the task. Will Berkshire Hathaway investors still be partying in Omaha then?