Warren Buffett said that Greg Abel should make the final decision on investments at Berkshire Hathaway, making it clear that his successor will have authority not only over acquisitions but also over the giant conglomerate’s vast stock portfolio.
At Berkshire’s annual meeting in Omaha on Saturday, Buffett gave his most direct answer yet to the question of how responsibilities will be distributed among the small executive team that will one day run the company, putting Abel in charge of distributing hundreds of billions of dollars.
“I think the responsibility should fall entirely on Greg,” Buffett said on stage at the CHI Health Center in downtown Omaha. “I used to think differently about how this should be handled, but I think the responsibility should lie with the CEO.”
He said Berkshire’s board would ultimately make the decision if he died, although he said: “I might try to come back and pursue them if they do it differently.”
Investors had expected Abel to run the company’s operating subsidiaries and be the person running Berkshire’s big game hunt – as Buffett describes the multibillion-dollar acquisitions with which he made his name.
But many had expected that Berkshire’s $336 billion stock portfolio would fall to Buffett’s two investment representatives, Todd Combs and Ted Weschler, and that those two men would play a large role in the use of the company’s $189 billion cash stockpile could.
“I think the CEO should be someone who can weigh buying companies, buying stocks, all sorts of things that might come up at a time when no one else is willing to do anything,” he said.
Abel played a large role in Berkshire’s acquisitions, including its acquisition of PacifiCorp in 2006 and Dominion Energy’s pipeline business in 2020. Buffett revealed during the annual shareholder meeting that Abel also played a role in Berkshire’s failed bid for the technology distributor Tech Data had played in 2019.
It was unclear whether Abel wanted to manage the common stock portfolio himself or whether the investment managers simply wanted to report to him so they could conduct their own trades.
Last year, Abel told CNBC that Combs and Weschler managed their own portfolios, “and that will always be the case, and they will manage it accordingly.”
“I might ask them, ‘That was really interesting. What piqued your interest?’” Abel said of his conversations with Combs and Weschler about their stock investments. “But that’s the extent of it. And aside from the important relationships with both of them, that’s her portfolio.”
Buffett has spoken in recent years about sharing similar views on capital allocation as Abel, who rose through the company’s utilities business and now has oversight of all non-insurance activities as vice chairman. He added that his decision was influenced by Berkshire’s sheer size. “We don’t want to try to have 200 people around us, each managing $1 billion.”
Christopher Rossbach, chief investment officer of Berkshire shareholder J Stern & Co, said Buffett’s comment was “very significant” because it showed “part of the way forward.” He added that this raised new questions, including how Abel would approach managing the stock portfolio.
“We haven’t heard much from Greg about the public investments,” Rossbach said. “It will be part of this ongoing transition to learn more about how this company will be structured and then also more about how Greg Abel thinks about it.”
Compared to previous years, Abel took on a larger role at Saturday’s meeting, the first since the death of Buffett’s longtime business partner and Berkshire Vice Chairman Charlie Munger in November. Buffett also gave the official portion of the day – when shareholder proposals were voted on – to Abel as moderator, citing problems with his own voice and vision.
Abel spent the day sitting next to Buffett on stage both morning and afternoon. Vice Chairman Ajit Jain, who heads the insurance business, was present only for the first part of the day. Abel appeared relaxed as he discussed the BNSF railroad’s performance, how Buffett approached his investment in Occidental Petroleum and how it handled litigation over wildfires — including its efforts to pass state laws that would limit its liabilities in future disasters .
“We don’t want to throw good capital after bad capital,” Abel said of the utility business after the wildfires, echoing a comment Buffett made in his annual letter in February. “We will be very disciplined.”
Investors saw Abel as a strong operator of Berkshire’s core businesses, helping to improve the company’s margins and profitability, a point Buffett credited him with on Saturday.
“If you have 20 kids and you’re very rich, there are going to be some who are good anyway and others who aren’t,” Buffett said. “We’re a very, very rich company and we’ve never had a history of being particularly tough on people who have been left idle.”
“Greg will do something about it,” he added.
At the beginning, Buffett incorrectly referred to Abel as “Charlie” when he asked him a question. The packed arena — so packed that hundreds of people sat backstage and couldn’t see Buffett in person — erupted in thunderous applause.
“I’m so used to it. . . he said before laughing. “I’ve checked myself a few times. I’ll slip again.”
When asked what he would do if he spent another day with Munger, Buffett replied, “We had a lot of fun doing everything.” We played golf together. We played tennis together. We’ve done everything together . . . We had just as much fun, maybe even more, with things that failed because then we actually had to work.”
Munger’s death made it clear that there may not be many more meetings with Buffett. Dominic Evans, traveling from London to Omaha, got in line at 4:45 a.m. to get a good spot. He said he wanted to come to “show his support” for Buffett.
“Get out the Kleenex for this year because you know you lost someone who is a great teacher,” he said. “Fortunately, so much of his material is already available. . . but you know, it will be irreplaceable.”
Buffett acknowledged his mortality several times on Saturday. He told shareholders: “Not only do I hope you come next year, but I hope I come next year too.”
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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 for acquiring the knowledge the way I did. . . We lost money at Paramount and I did it all by myself, guys.”
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“My best guess is that US debt will be acceptable for a very long time because there aren’t many alternatives. But it won’t be because of the quantity. You know, for a long time the national debt was nothing special.”
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“I don’t think anyone sitting at this table has any idea how to use it effectively, and that’s why we’re not using it now at 5.4 percent, but we wouldn’t be using it if it was at 1 percent “Don’t tell the Federal Reserve that, we prefer it.” We only swing at the pitches we like.”
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