To say that Warren Buffett’s successor, Greg Abel, has big shoes to fill would be an understatement.
Berkshire Hathaway’s vice president of non-insurance operations was recently in Japan with Buffett to visit the country’s top trading houses. In a three-hour interview with CNBC, the 92-year-old “Oracle of Omaha” praised Abel and said he took on most of the duties.
“He’s doing all the work and I’m bowing — that’s exactly what I wanted,” Buffett said on April 12 in a CNBC interview in Japan. “He knows more about the individuals, the business, he’s seen them all…they.” I haven’t seen myself on the BNSF Railroad in 10, 12 years or something.
Abel became known as Buffett’s heir apparent in 2021 after Charlie Munger accidentally made the reveal at the shareholders’ meeting. Abel has overseen much of Berkshire’s sprawling empire, including energy, railroads and retail.
Buffett revealed that contrary to what many might have thought, there was no competition between Abel and Ajit Jain, Berkshire’s vice president of insurance operations, for the top spot. The two have been considered top contenders since their promotion to vice chairs in 2018.
“Ajit never wanted to run Berkshire,” Buffett said.
skin in the game
Abel recently loaded Berkshire Hathaway Shares with his private assets. The 60-year-old executive vice chairman increased his stake in Berkshire in March, taking the total value of his shares in the company to about $105 million.
The move strengthened his grip on the business and gave shareholders hope that the culture at Berkshire will live on.
“Which makes you really optimistic about the future of Berkshire now that Buffett Munger has acquired a significant stake in the company,” said Bill Stone, chief investment officer at Glenview Trust and a Berkshire shareholder. “One of the beauties of Berkshire is that you always knew it was like an owner manager.”
Abel is also known for his strong expertise in the energy industry. Berkshire acquired MidAmerican Energy in 1999, and Abel became the company’s CEO in 2008, six years before it was renamed Berkshire Hathaway Energy in 2014.
In 2022, Berkshire proposed spending nearly $4 billion to help generate more wind and solar power in Iowa. At the same time, the conglomerate has dramatically increased its exposure to two traditional energy companies – Occidental Petroleum And chevrons. Some shareholders want Abel to address these developments in the industry.
“That is the question for him. Help us understand why you’re being aggressive with your Iowa solar and wind investments while simultaneously buying oil and gas stocks,” said Bill Smead, chief investment officer of Smead Capital Management and a Berkshire shareholder.
‘We will see’
While shareholder confidence in Abel’s abilities has grown, some important questions remain about the potential successor.
“When opportunities arise, who has the final decision? Is it the board? How does dispute resolution work if there’s a dispute,” said one Berkshire shareholder, who spoke on condition of anonymity.
Abel’s track record of more than two decades at the conglomerate convinced Buffett that the two were on the same wavelength when it came to closing deals and allocating capital.
“Berkshire’s management has already improved dramatically. And we think the same way when it comes to takeovers. We think the same way when allocating capital. I mean, he’s a big improvement for me, but don’t tell anyone,” Buffett said in Japan.
Aside from Berkshire’s massive operations, the conglomerate has a massive stock portfolio worth over $300 billion that Buffett manages. His two investment lieutenants, Todd Combs and Ted Weschler, each manage about $15 billion.
“Only time will tell. There are companies that have done exceptionally well after the death of their founders, like Apple, but others have struggled, like GE,” said another longtime shareholder, who asked not to be named.