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Summary List PlacementBerkshire Hathaway held its annual shareholder meeting on Saturday, and Warren Buffett pointed to Greg Abel, the 58-year-old leader of Berkshire’s non-insurance businesses, as the next in line if the Oracle of Omaha steps down.
“The directors are in agreement that if something were to happen to me tonight it would be Greg who’d take over tomorrow morning,” Buffett told CNBC on Monday.
Speculation about a successor for the famed billionaire investor began in 2006, when a spry 75-year-old Buffett first discussed succession plans in an annual shareholder letter.
At the time, Buffett said that while how he had hoped Charlie Munger, his longtime right-hand man, would take over the business, he needed someone younger to fill the role.
Buffett added that Berkshire needed “someone genetically programmed to recognize and avoid serious risks, including those never before encountered.”
Abel’s comments at this year’s shareholder meeting suggest he may be exactly the “genetically programmed” risk manager that Buffett, now 90, had envisioned in 2006.
“I’m trying to understand what our competitors are doing, what’s the fundamental risks around those businesses, how they’re going to get disrupted,” Abel said. “It always comes back to are we allocating our capital properly in those businesses relative to the risk?”
Background and résumé
Abel began his career working for PricewaterhouseCoopers before joining CalEnergy, a geothermal-electricity producer, in 1992.
In 1999, CalEnergy acquired MidAmerican Energy and adopted its name before Berkshire Hathaway picked up a controlling interest in the firm later that year.
In 2008, Abel became the CEO of MidAmerican, which was renamed Berkshire Hathaway Energy in 2014.
The Canadian-born certified public accountant was the CEO of Berkshire Hathaway Energy from 2008 to 2018 and the president from 1998 to 2018. Abel currently serves as Berkshire Hathaway Energy’s chairman and has served on the board of directors since 2000.
In January 2018, Abel was named vice chairman of non-insurance operations for all of Berkshire Hathaway and appointed to the conglomerate’s board of directors.
Abel also serves as a director and vice chairman of Associated Electric & Gas Insurance Services Limited and is on the board of directors for the Kraft Heinz Company and AEGIS Insurance Services.
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The succession of the Oracle of Omaha
Abel has for years been known on Wall Street as the likely successor to Buffett.
In 2017, Sarah DeWitt, an analyst with JPMorgan, initiated coverage of Berkshire and said the energy executive was the “most likely” candidate to replace Buffett.
The conglomerate, however, didn’t confirm the suspicion — until Saturday. At Berkshire’s annual meeting, Abel was named the successor to Buffett.
Munger, Berkshire’s vice chairman, said he believed that Abel would “keep the culture” that has made Berkshire so successful for decades, CNBC reported.
During his reign, Buffett has turned Berkshire Hathaway into a more than $630 billion business. The conglomerate owns a share of everything from Apple and Coca-Cola to Bank of America and UPS.
Buffett has been an ardent supporter of the American economy — and the stocks that track it — since he began investing in 1942.
Based on what Buffett and Munger have said about Abel, investors can expect much of the same from the longtime Berkshire loyalist when he takes the reins.
Thoughts from the Street
Analysts, market commentators, and professors were mostly positive about Abel’s prospects as the leader of Berkshire Hathaway. Here are four reactions to the news of his selection:
1. “Abel, of course, does not have the charisma, personality, and reputation that Buffett built over decades, so he’s not going to have that magnetism that Buffett has, but he exudes extreme competence and success. He has a very successful track record at Berkshire, and I don’t think shareholders can ask for anything more than that,” David Kass, a professor of finance at the University of Maryland’s Robert H. Smith School of Business, told Bloomberg.2. “Greg is a natural successor to Warren Buffet and has been groomed for this post. Culturally it’s a smart pick and one that should sit well for investors. That said, filling the shoes of a global icon and investing genius is a tough task and will have its share of challenges ahead. It’s like filling in for Mantle or Gehrig in the Yankees lineup after they left,” Dan Ives, the managing director of equity research at Wedbush Securities, told Insider via email.
3. “The good news with Greg was he had the answers on his tongue. There was no question or ambiguity in his responses. Let’s hope Charlie is right that the culture can be replicated,” Ed Walczak, a portfolio manager at Vontobel, told the Financial Times.
4. Jim Shanahan, an analyst at Edward Jones, told Reuters that he suspected Buffett “disclosed this reluctantly.” He added that “Abel’s coronation is not exactly a surprise” and that he had a “great deal of comfort” with him taking over the business.
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