Warren Buffett says Greg Abel should have the final say on investments in Berkshire Hathaway, saying his successor should not only make acquisitions but also the vast conglomerate's vast stock portfolio. It was made clear that he had authority.
At Berkshire's annual shareholder meeting in Omaha on Saturday, Buffett gave his most direct look yet at how responsibility is distributed among the small group of executives who will one day lead the company. He provided answers and handed Mr. Abel responsibility for allocating hundreds of billions of dollars.
„I think the blame should rest entirely on Greg,“ Buffett said from the stage at CHI Health Center in downtown Omaha. „Previously, he had a different idea of how it should be handled, but he believes the responsibility should lie with the CEO.“
He said Berkshire's board would ultimately make the decision after his death, but added: „If they do things differently, I might come back and haunt them.“ .
Investors had expected Mr. Abel to be the man to lead the company's operating subsidiaries and lead Berkshire's big-game hunt (what Buffett calls the multibillion-dollar acquisitions that bear his name). .
But many believe that Berkshire's $336 billion stock portfolio ended up in the hands of two of Buffett's investment agents, Todd Combs and Ted Weschler, who played a major role in running the company. I expected it to work. $189 billion pile of cash It's being expanded.
![Column chart of cash, cash equivalents, and short-term Treasuries ($1 billion) showing Berkshire's cash pile at a new all-time high.](https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd6c748xw2pzm8.cloudfront.net%2Fprod%2F63c48400-0a1c-11ef-bf22-0f335fa4cade-standard.png?source=next-article&fit=scale-down&quality=highest&width=700&dpr=1)
![Column chart of cash, cash equivalents, and short-term Treasuries ($1 billion) showing Berkshire's cash pile at a new all-time high.](https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd6c748xw2pzm8.cloudfront.net%2Fprod%2F63c48400-0a1c-11ef-bf22-0f335fa4cade-standard.png?source=next-article&fit=scale-down&quality=highest&width=700&dpr=1)
„I think the chief executive has to be someone who can consider business acquisitions, stock acquisitions, all sorts of things that can happen at a time when no one is going to make a move,“ he said.
Mr. Abel has played a major role in Berkshire's acquisitions, including the acquisition of PacifiCorp in 2006 and Dominion Energy's pipeline business in 2020. Buffett revealed at the annual shareholder meeting that Abel was also involved in Berkshire's failed takeover bid for technology distribution company Tech Data. 2019.
It's unclear whether Mr. Abel wants to manage the common stock portfolio himself or simply let investment managers report on him and trade them himself.
Abel from last year told CNBC Mr. Combs and Mr. Weschler run their own portfolios, and „that's what they will continue to do, and they will manage them accordingly,“ he said.
„I might ask them, 'That was really interesting. What got you interested?'“ Abel said of his conversations with Combs and Weschler about stock investing. „But that's about it. And besides the relationship with both of them, which is important, that's their portfolio.“
Mr. Buffett said he shares similar views on capital allocation with Mr. Abel, who has risen through the ranks in the company's utilities business in recent years and now oversees all non-insurance operations as vice chairman. He added that his own decision was influenced by Berkshire's size. „We don't want him to have 200 people around him, each managing his $1 billion.“
Christopher Rosbach, chief investment officer at Berkshire shareholder J. Stern & Co., said Buffett's comments were „very important“ and signaled „part of the path forward.“ Stated. He added that new questions arose, including how Abel would approach managing its stock portfolio.
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„I haven't heard much from Greg yet about public investment,“ Rosbach said. “This is part of this ongoing transition where we learn more about how that business is structured, and then we also learn about how Greg Abel thinks about it. ”
Compared to previous years, Mr. Abel played a larger role in Saturday's meeting, his first since serving as Mr. Buffett's longtime business partner and vice chairman of Berkshire. Charlie Munger He passed away in November. Mr. Buffett also handed over control of the official portion of the day (when voting on shareholder proposals) to Mr. Abel, citing his own voice and vision problems.
Abel spent the day sitting next to Buffett on stage during both the morning and afternoon sessions.Vice-chairman Ajit Jain, who runs an insurance business, attended only the first part of the day. Mr. Abel discusses BNSF Railway's performance, how Mr. Buffett approached his investment in Occidental Petroleum, and his response to wildfire litigation, including efforts to pass state laws limiting future liability. They talked about such things and seemed relaxed. A disaster.
„We don't want to put good capital after bad capital,“ Abel said of utilities after the wildfires, echoing comments made by Buffett in his annual letter in February. “We are very disciplined there.”
Investors see Mr. Abel as a strong manager of Berkshire's core businesses, helping drive the company's margins and profitability, and Mr. Buffett acknowledged his work on Saturday.
„If you have 20 kids and you're a millionaire, some of them are going to be go-getters anyway, and some aren't,“ Buffett said. „We're a very wealthy company, but we don't have a history of being very hard on people who work in inertia.“
„Greg will do something about it,“ he added.
At first, Buffett mistakenly called Abel „Charlie“ when passing the question to him. The arena was packed to capacity, with hundreds of people sitting behind the stage and unable to see Buffett live, but there was thunderous applause.
„I'm used to it…“ he said with a laugh. „I've already checked myself several times. I'm going to slip again.“
When asked what he would do if he could spend one more day with Munger, Buffett replied: We used to play golf together. We used to play tennis together. We did everything together. . . I enjoyed the failures just as much, and to some extent even more. Because at that time I really had to work. ”
Mr. Munger's death underscored the fact that there may not be many meetings featuring Mr. Buffett in the future. Dominic Evans, who traveled from London to Omaha, got in line at 4:45 a.m. to get a good seat. He wanted to come „to show support“ for Mr. Buffett, he said.
“Get out the Kleenex this year, because you lost someone who was a great teacher,” he said. „Fortunately, much of his material is already out there… but it will be irreplaceable.“
Buffett acknowledged his death multiple times on Saturday. „Not only do I hope you come next year, I hope you come next year,“ he told shareholders.
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„I think I'm smarter now than I was a year or two ago, but I also think I'm poorer because I've acquired the same knowledge. . . . We lost money at Paramount, but… , I did it all myself.”
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„My best guess is that the U.S. national debt will be accepted for a very long time because there aren't many alternatives. But not in quantity. You know, the national debt has been around for a long time. It wasn't worth talking about.“
On why he won't do more with Berkshire's $189 billion cash pile
„I don't think there's anyone sitting at this table who hasn't thought about how to use it effectively. So right now, 5.4 percent aren't using it, but 1 percent is You won't.'' Don't tell the Federal Reserve that, we want it. We only swing at pitches we like. ”
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„Berkshire's culture, where shareholders are partners and management has a spirit of ownership, will never change, and we will attract the right management at every level.“