Warren Buffett is back in the news, and not on the opinion pages about the so-called “Buffett Rule” that would subject high-income earners to additional taxation.

Buffett is on Page One because he has prostate cancer. It’s Stage One, easily treatable and not life-threatening, The revered Oracle of Omaha says he not only feels great but will keep working his normal schedule, though his travel will be restricted later this summer as he undergoes radiation.

#-ad_banner-#So, predictably, it’s game-on for Buffett watchers, who are all over the airwaves speculating as to the palace intrigue and about how Ajit Jain clearly will be the next CEO. But Jain is too valuable as Lord Chancellor of Berkshire Hathaway’s (NYSE: BRK-A) (BRK-B) reinsurance business. He’s no crown prince. A coronation would be a lovely accolade, surely, but Jain is far too effective, and far too happy, to be moved from his current role. Keeping talent in place is a longstanding Berkshire tradition. 

What’s more, Berkshire’s CEO candidate doesn’t know that he or she has been chosen by the board as the leading contender, and there is nothing that happens at Berkshire that Jain isn’t told about. Buffett talks to him every day. That also excludes Buffett’s new stock pickers, Ted Weschler and Todd Combs, who took over running a portion of Berkshire’s portfolio after longtime investment manager Lou Simpson retired from Geico in late 2010.

Every candidate being bandied about on financial TV is an operations guy. That’s wrong. The chairman of Berkshire needs to be all about deal-making. After all, each Berkshire unit, from See’s Candy to MidAmerican Energy, runs itself.

Buffett has long stated that excellent management is a prime requirement for Berkshire acquisitions, as it is the only thing that Berkshire cannot supply. Once companies are acquired, they are independent business units. Buffett has joked for years that he delegates to the point of abdication. He’s not standing by the supply cabinet monitoring who takes Post-It notes. (I hear he has a well-paid secretary for that sort of thing.)

And what kind of deals does Buffett pine for? He likes buying large, family-owned enterprises with long histories of predictable profitability achieved with very little additional capital infusion. Typical of the breed: Buffett bought Marmon Industries, a collection of 125 manufacturing and service companies, for $4.5 billion from Chicago’s Pritzker family, in 2007. Those kinds of deals need a gentle touch, a special perspective that’s cultivated, honed — not in the trenches, not in the conference room — but through personal interaction, at Sun Valley and Aspen. The critical sit in those deals takes place in homes, not board rooms. To put it in pop-culture terms, you don’t need Bob Sugar. You need Jerry Maguire.

Geico boss Tony Nicely doesn’t have what it takes, either. He knows insurance. Burlington Northern CEO Matthew Rose knows trains and Lubizol head James Hambrick knows about industrial manufacturing, but neither have the temperament. Greg Abel comes close, but he, like Jain, is too valuable in his current role as the head of MidAmerican. And he makes more money there, too, which is not an incidental consideration.

The right man for the job is Bryon Trott.

You might not have heard of him, but he’s my odds-on favorite to run Berkshire after Buffett retires, which he has scheduled for “five years after [his] death.”

I give Trott a three-in-four chance.

Trott, 53, is a Goldman Sachs (NYSE: GS) alumnus — former vice chairman, to be exact. Buffett’s $5 billion investment in Goldman was at Trott’s suggestion. He’s worth a fortune, of course, and now runs a boutique investment shop in Chicago, catering to — wait for it — extremely wealthy families.

That’s three votes in his favor: Buffett worships Goldman Sachs, they’ve done a deal together and Buffett loves family-owned businesses. He greatly respects the people who, like him, can put those deals together. That is the legacy he wants to leave at Berkshire. The rest of the company runs itself.

Another thing to like about Trott — besides the fact that he is a well-connected, well-respected outsider, is that he’s a major holder of Berkshire shares: 392 Class A shares as of his latest filing with the SEC. The shares were worth $45 million, about a third of his BDT Capital Partners’ $115.1 million publicly disclosed portfolio.
 
His other major Trott holding to take note of: Molex, a $4.8 billion electric components company, with $3.5 billion in annual sales and a balance sheet strong enough to make Buffett grin. A Molex not a barn-burner (though it is a key supplier to Apple Inc. (Nasdaq: AAPL)). It’s hardly sexy. It just does its thing, does it well, and makes money. Classic Buffettology. The whole enterprise screams “Buy me” to Berkshire. But that’s not what to watch…

The conventional wisdom is that Buffett will be OK. I mean, anyone who can beat the S&P for four decades ought to be able to handle cancer. But Buffett is not really the one to watch, either.

The guy to keep an eye on is Byron Trott.

Action to Take –> Berkshire Hathaway is a screaming “buy” now, at just 1.1 times book value, but it likely will be an even better buy after Buffett leaves because of the likely selloff that will take place when that happens. That could be in 10 years, though — when Trott is still just 63 — and I hope it is.