It was a long enough break for the dazzling Berkshire Hathaway investors to notice. Charlie Munger and Warren Buffett Spread Berkshire – the 63 631 billion sum they oversee – could be too big to handle.
“Greg will maintain the culture,” Munger, the 97-year-old vice chair, said behind and behind them. It was an observation that the buffet missed a beat very briefly
Greg Abel is the 58-year-old vice chairman of Berkshire who was the custodian of the company’s insurance investment. These include the Burlington Northern Railway, a wide range of manufacturing businesses and utilities that he once ran as chief executive. He is also frequently one of the two to take charge one day from Buffett
In making the plan on inheritance by the board, the inheritance formula has been kept from a wider world. It’s a secret that has fascinated Berkshire shareholders for at least a decade, and one of the big questions that has been asked by companies that have given Munger and Buffett age companies. Buffett will celebrate his 91st birthday this August.
On Saturday, investors were given the buffet’s top two lieutenants: Abel and his colleague Ajit Jain still in their closest look.
On stage, the pair sat side by side at the annual meeting of the year with Buffett and Munger, raising questions and defending their strategies. Abel spent most of his time creating a case for Berkshire’s renewable energy investment and why the company did not need to accept any shareholder proposals that would require its agencies to report on what action it is taking on climate change.
Ed Olkakak, a portfolio director at Vontobel, was among the investors who noticed Munger’s comment, which came three-and-a-half hours late in the day. He said it was interesting that Munger or Buffett were not directly asked to take responsibility for anyone.
“The good news with Greg was the answer was on his tongue. There were no questions or hesitations in his responses, ”he said. “Let’s hope Charlie is right that the culture can be recreated.”
Rather, on Saturday, Abel played a more high-profile role Submissive display The previous year when he attended a Monday annual meeting at Buffett and played a supportive role for his boss. This year he gave his views on inflationary pressures affecting Berkshire Takeover war Rival rail operator Kansas City South as well as how he spends his career
“I’m trying to understand what our competitors are doing, how there are fundamental risks around these businesses, how they’re going to be disrupted,” he said. “Does it always come back that we are allocating our capital correctly to those businesses rather than risk?”
James Shanahan, an analyst at Edward Jones, said Abel appeared as a “highly skilled” executive and that the meeting benefited from the presence of both him and Jain. The pair provided insights into a field where investors have complained that they have eaten up some information: how the company’s underlying operating business is doing.
“Given the Berkshire Playbook, which investors do not have an active role to play, sharing Greg’s information and transparency was a welcome change,” said Cathy Siffert, an analyst at CFRA Research.
Abel and Jain were Promoted in 2018 To the company’s vice chairmen, the narrowing of their ranks for the chief executive role and the most visible among Berkshire executives, including Todd Combs and Ted Wesler, who help manage Berkshire’s investment portfolio. Buffett said at the time that the promotions were “part of the movement towards succession.”
But Buffett’s successor has plans Drawn fire From some big shareholders. BlackRock voted against Walter Scott, head of the board’s steering committee, this year, citing “limited disclosure of the legacy plan,” among other things. The role of Buffett’s external leadership in Berkshire makes the successor’s risk even greater, Blackrock said.
“There’s this parlor game about inheritance,” Seifert said. “From Berkshire’s point of view the successor problem has been solved and paraphrased. . . They got Greg. “
When Abel or one of his contemporaries inherits Berkshire, they will face challenges, even if the company does not flow immediately. Buffett plans to donate the lion’s share of his assets, which are mainly in shares of Berkshire Hathaway’s Class A stock. As these shares are converted to Class-B and sold to new investors, the group may face more pressure from its shareholders and potentially be investigated by an employee, Sefert said.
Buffett himself has acknowledged this. In 2019 He said “There is no stability” and Berkshire “needs to continue in its current form”.
The pressure is already built. This year, investors have expressed growing frustration with Berkshire’s efforts on climate change. A shareholder’s proposal on the disclosure of climate change has received about 25 percent of the vote, reflecting the support of large investors in Berkshire for taking these steps. Buffett’s Class-A stock has 10,000 times the voting power of the Class-B general stock which is more widely distributed by the general public.
Large holders of those Class-B stocks, including BlackRock and Norges Bank, voted in favor of the proposal.
“In support of the resolution, the remaining shareholders sent a strong message to the company about the importance of acknowledging this climate risk,” said Dan Bakal, director of the sustainable investor network Ceres.
Shanahan added that Buffett’s partnership distorted the outcome of the vote, but that over time the transfer of the shareholder base would leave a mark on the company. “I think he kicked the road, but it’s inevitable that investors and other stakeholders will demand disclosure about progress.”
Buffett spent some time on Saturday explaining how he had led the company through the crisis and justified why the Berkshire board advised stockholders to vote against the two shareholders’ proposal. In featured fashion, she also joked about the top two nongens.
“People talk about adult management in Berkshire,” he said. “I always assume they’re talking about Charlie when they say it. But I want to mention it in three more years [when Munger turns 100], Charlie will grow 1 percent a year. No one is younger than Charlie. ”
Additional reporting by Patrick Temple-West