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OMAHA, Neb. (AP) — Everyone knows Warren Buffett’s successor can’t match the legendary investor, but Berkshire Hathaway’s board remains confident that Greg Abel is the right man to lead the conglomerate one day into the future respectively.
Longtime Berkshire board member Ron Olson told investors gathered Thursday at a conference two days before the company’s annual meeting that Abel understood all of the core principles that guided Buffett, such as that Berkshire’s companies largely self-managed. And Abel will work to run Berkshire in a conservative manner to protect the company known for its financial strength, he said.
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“Greg is not someone who is as likely to develop the kind of following in the press that I think Warren had,” Olson said. “On the other hand. I have every reason to believe that he will run the companies for which we are responsible in the same way that Warren ran them.”
Olson said he is confident business owners will remain willing to sell their companies to Berkshire once the Canadian utility takes over following the death of the 93-year-old Buffett.
Olson said he also doesn’t believe there will be any future public litigation with the billionaire Haslam family last year over how much Berkshire would ultimately pay for the final 20% of the Pilot Truck Stop chain that the family wanted to sell to Buffett will deter business. Both the Haslams and Berkshire accused each other of trying to manipulate Pilot’s earnings to influence the final $2.6 billion price tag.
Business owners thinking about selling can see all of the positive and respectful relationships that Berkshire has with its dozens of other subsidiaries in the 200,000-square-foot exhibition hall adjacent to the arena where Saturday’s meeting will be held, Olson said.
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In fact, the litigation gave Olson, a partner at Berkshire’s main law firm, the chance to work closely with Abel, giving him even more confidence in the board’s chosen successor.
“I can tell you his preparation and thinking was impressive. He thinks strategically. And he is decisive in his judgment,” Olson said.
Additionally, Berkshire has more than $167 billion in cash, so it has ample resources for deals, and Olson said, “People generally like to be paid in cash.”
Abel, who keeps a low profile and doesn’t normally give interviews, will answer questions alongside Buffett for hours on Saturday, trying to help fill the role that Buffett’s longtime partner Charlie Munger held for decades before he died last fall. Abel has led all of Berkshire’s various non-insurance businesses for several years, while another vice chairman, Ajit Jain, oversees insurance businesses, including Geico and General Reinsurance.
Olson said Abel was a numbers guy who could analyze a company’s balance sheet as quickly and well as Buffett, and he was also a great listener who people enjoyed working with.
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But Olson said, “Greg won’t be as entertaining as Warren and Charlie have been over the years.”
That’s why Munger’s absence will be keenly felt by the thousands of people who attended the gathering on Saturday. There is simply no way to replace the expertise, advice and friendship that Munger provided to Buffett for more than six decades.
Professor Lawrence Cunningham, who has written several books about Berkshire, said he believes the company he helped build will endure even after the serious loss of Munger.
“The chair is empty. There is no way to fill it. But I’m also confident that Warren – and especially Greg and Ajit – will carry the torch,” Cunningham said.
Berkshire has struggled with succession questions for decades, but Cunningham said he believes Buffett and Munger have built an organization bigger than themselves that will endure.
Olson said Berkshire’s board knows there is simply no other Warren Buffett or Charlie Munger to replace these two men.
After Buffett’s death, Berkshire will come under pressure as its shareholder base evolves to include more index and activist investors. Investors could, among other things, demand that Berkshire change its longstanding policy and start paying a dividend if the company can’t find a good use for all that money.
Olson said the board has not ruled out paying a dividend at some point in the future, but is also not seriously considering approving a dividend now that Buffett is still at the helm.
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