Greg Abel’s first test: winning over Warren Buffett’s Berkshire faithful

{"text":[[{"start":9.6,"text":"Warren Buffett’s folksy brand of showmanship earned him the loyalty of investors and helped turn Berkshire Hathaway into a $1tn conglomerate. "}],[{"start":19.7,"text":"Now Greg Abel, Buffett’s successor, will need to show that he too can woo the thousands of Berkshire groupies who are descending on Omaha on Saturday for an annual meeting often called the Woodstock for Capitalists. "}],[{"start":32.55,"text":"The question for the long-serving Berkshire executive, who rose up through the company’s utility business, is how he can build on Buffett’s legacy while convincing a changing shareholder base to stick around for the company’s next act."}],[{"start":45.4,"text":"“People can argue whether Kobe Bryant or LeBron James is better than Michael Jordan. But nobody can argue with the fact that Warren Buffett is the greatest investor of all time,” John Rogers, the co-chief executive of Ariel Investments, said. “Greg knows that.”"}],[{"start":60.9,"text":"Abel has a big task ahead of him as he takes the reins of one of America’s most valuable companies, which touches nearly every part of the US economy, with wind farms and coal power plants, a railroad that traverses 28 states, and subsidiaries that make everything from chocolate to underwear to parts for Boeing aeroplanes. "}],[{"start":null,"text":"

"}],[{"start":80.7,"text":"Investors are especially keen to know how Abel will deploy the company’s $370bn cash war chest."}],[{"start":87.75,"text":"“I would just hope, and I’m highly confident, that Greg will execute based upon the playbook that Warren has proven to be such a winning playbook,” Rogers added."}],[{"start":97.45,"text":"Abel, who started his career as an accountant at PwC in San Francisco before joining an energy company that Berkshire later acquired, is already putting his stamp on the business. He has brought in the company’s first internal legal counsel, hired a new chief financial officer and elevated the head of NetJets to oversee dozens of consumer-focused subsidiaries."}],[{"start":118.9,"text":"He has also taken control of the near $300bn stock portfolio and may not hire a chief investment officer, a role Buffett and his late partner Charlie Munger had once envisioned creating as a central part of the company’s hierarchy."}],[{"start":133.15,"text":"Buffett’s view later shifted, and in 2024 he laid out an expansive role for Abel, with the view he would have the final say over stock investments."}],[{"start":142.1,"text":"Abel has spent the better part of the past year familiarising himself with the company’s insurance businesses — one of its key units. Berkshire has long used the premiums it earns on insurance policies to fund its stock purchases, as it did when it ploughed billions of dollars from its cash pile — bolstered by a reinsurance deal with AIG in 2017 — into Apple shares. It was one of the most profitable trades Buffett ever clinched."}],[{"start":null,"text":""}],[{"start":168.2,"text":"Chris Bloomstran, chief investment officer of Semper Augustus, said he and other shareholders were keen to hear how Abel thought about putting the company’s cash to work, even as much of it is held to meet insurance regulatory requirements."}],[{"start":182,"text":"Berkshire has sold stocks for 13 consecutive quarters and while it has struck several billion-dollar-plus deals of late, including the $9.5bn takeover of a chemicals unit from Occidental Petroleum and the $1.8bn investment in Japanese insurer Tokio Marine, it has refrained from the types of mega deals Buffett has called “elephant hunting”."}],[{"start":204.05,"text":"“It is really important what [Abel] does on the capital allocation front,” Bloomstran said. He added that he expected Abel to be more opportunistic than Buffett has been, but that the 63-year-old chief executive would probably wait for a sizeable drawdown in the stock market before ploughing in materially. US stocks closed at record highs on Thursday. "}],[{"start":224.5,"text":"Abel said in his first letter to shareholders that he planned to continue Buffett’s approach of having concentrated equity positions and that the stock portfolio “will evolve and grow as opportunities arise”. "}],[{"start":237,"text":"While the company has been selling out of several of its smaller stock positions, investors and analysts said they were keen to hear more about how Abel planned to scour the market for possible investments. "}],[{"start":248.35,"text":"“You have someone with no professional asset management experience being charged with asset allocation and replacing one of the world’s greatest investors,” said Cathy Seifert, an analyst at CFRA Research."}],[{"start":null,"text":""}],[{"start":260.7,"text":"Abel has signalled that it is business as usual at Berkshire, including how he will approach acquisitions, share buybacks and minority stock investments. Buffett remains active as Berkshire’s chair, working from the company’s office in Omaha, and talks through investment ideas with Abel, according to people familiar with the matter. But, at 95, he is slowing down, they said."}],[{"start":283.09999999999997,"text":"Investors on Saturday will hear from other top executives alongside Abel, including Berkshire vice-chair Ajit Jain, who oversees its insurance operations, BNSF chief executive Katie Farmer and Adam Johnson, the president of Berkshire’s consumer products, service and retailing unit — divisions that generated roughly $57bn in sales last year."}],[{"start":306.24999999999994,"text":"“It would behove Greg to highlight the other leaders at Berkshire because they’ve got a lot of leaders who are getting on in years and there has been a lot of turnover,” Seifert added."}],[{"start":315.8999999999999,"text":"Berkshire shareholder Vonmarie Thomas, who travelled to Omaha last year, said she would still tune in this year, albeit electronically, despite the fact Buffett will be seated in the audience."}],[{"start":326.3499999999999,"text":"She will be watching to see “how closely [Abel’s] value system is compared to Warren Buffett’s” and if he will continue “giving us the returns that we’ve expected and grown to know”. "}],[{"start":338.4999999999999,"text":"In other words, she wants to know: “Are we safe?”"}],[{"start":349.8999999999999,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1777643518_1938.mp3"}