Berkshire Hathaway Inc.’s annual meeting on Saturday gave shareholders a glimpse of how the conglomerate will function without Charlie Munger, who died last year at age 99. Then came the questions: How will it work without Warren Buffett?
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(Bloomberg) — Berkshire Hathaway Inc.’s annual meeting on Saturday gave shareholders a glimpse of how the conglomerate will function without Charlie Munger, who died last year at age 99. Then came the questions: How will it work without Warren Buffett?
With the billionaire investor turning 94 this year and Munger passing away in November, succession at Berkshire has become an increasingly pressing matter for shareholders, even after Buffett named his successor, Greg Abel, in 2021. At the conclusion of Saturday’s event, he had the following to say say, “Not only do I hope you come next year, but I also hope I come next year.”
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Buffett and Munger transformed Berkshire from a failing textile mill into a behemoth that spanned industries such as insurance, energy and railroads, reaped billions in profits – including $11.2 billion in the first quarter – and amassed a huge pile of cash that ended up at a record March reached $189 billion. In an economy marred by elevated inflation and uncertainty over interest rate cuts, shareholders accustomed to Berkshire’s investment success wanted to know what could happen next without Buffett, who has been at the helm for decades.
What would the culture at Berkshire look like under Abel, one asked, as the company’s vice chairman of non-insurance operations joined Buffett on stage to answer questions. If Abel would take over the stock portfolio managed by Buffett, another question arose.
“That decision will be made when I’m not there,” Buffett replied – joking that he might try to go after those who do things differently than him. “I would leave the capital allocation to Greg. He understands companies very well, and when you understand companies, you understand common stocks.”
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Abel’s more than two-decade track record at the conglomerate includes high-profile deals and oversight of its sprawling noninsurance businesses, from the BNSF railroad to Dairy Queen. But Buffett’s aphorisms and status as the Oracle of Omaha have earned him a reputation as the avuncular face of capitalism and won him a following that Abel may find difficult to emulate.
Chris Bloomstran, president of Semper Augustus Investments Group, didn’t seem worried. Abel is a phenomenal leader who will be “a great allocator of capital,” he said before meeting at Gabelli Funds’ annual Omaha Value Investor conference on Friday.
“There is no other Warren Buffett,” he said. “Luckily they have a wonderful board.”
It was inevitable that Munger’s absence would play a big role at the meeting where, for decades, he stood on stage alongside Buffett and entertained the crowd with his jokes and – at times caustic – jokes. On the sidelines of Saturday’s event, it was clear to investors that there would never be another Buffett or Munger. As competent as their successors were, the pair brought an authenticity and charisma that was hard to replace.
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Munger tributes
On Saturday, Buffett praised Munger’s love of learning, his ability to rise above failure, his investment acumen and his wisdom. Buffett said he had never seen anyone reach a high of 99.
“He went everywhere with his mind, and so at 99 he was not only interested in the world, but the world was interested in him,” Buffett said. At one point, Buffett mistakenly referred to Berkshire Vice Chairman Greg Abel as “Charlie” when asked a question.
As the succession continued to emerge, Buffett repeatedly called for leadership changes at Apple, one of his favorite companies – even as he sold some of his shares in the first quarter. He pointed to the strong leadership of CEO Tim Cook, who succeeded Steve Jobs.
Read more: Charles Munger, who built Berkshire with Buffett, dies at 99
Munger died in November, just months before his 100th birthday, prompting a flood of tributes praising his deep knowledge, witty wit and investment acumen. A lawyer by training, Munger helped Buffett, seven years his junior, develop a philosophy focused on investing in companies for the long term.
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“I think he has given all of us permission to tell the honest truth when we can,” John Rogers, co-CEO of Ariel Investments, said at the Gabelli event. “And that’s what I think I get most from Charlie.”
Read more: A master of one-liners: Munger on politics, life and crypto
Under her leadership, Berkshire achieved an average annual gain of 20% from 1965 to 2022 – about twice as fast as the S&P 500 index. Decades of increasing returns made the two billionaires, folk heroes and enthusiastic investors.
“I think Charlie would be the first to say that Berkshire wouldn’t have done their job if his departure had hurt them,” said Adam Mead, who wrote “The Complete Financial History of Berkshire Hathaway.”
– With assistance from Katherine Doherty and Paige Smith.
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