Buffett defines expanded role for successor Greg Abel at poignant Berkshire shareholders' meeting

Warren Buffett said Greg Abel should have the final decision on investments at Berkshire Hathaway, making it clear that his successor will have authority not only over buybacks but also over the sprawling conglomerate's gigantic stock portfolio.

At Berkshire's annual general meeting in Omaha on Saturday, Buffett gave his most direct answer yet on how responsibilities will be distributed among the small management team that will one day run the company, telling Abel takes responsibility for how hundreds of billions of dollars will be allocated.

“I think the blame should fall squarely on Greg,” Buffett said from the stage at the CHI Health Center in downtown Omaha. “I used to think differently about how this would be handled, but I think the onus should be on the CEO.”

He said Berkshire's board would ultimately make the decision upon his death, although he said, “I might try to come back and haunt them if they do it differently.”

Investors expected Abel to run the company's operating subsidiaries and be the person responsible for hunting the big game in Berkshire — which is how Buffett refers to the multibillion-dollar acquisitions he's working on. made a name for himself.

But many expected that Berkshire's $336 billion stock portfolio would go to Buffett's two investment deputies, Todd Combs and Ted Weschler, and that those two men could play an important role in how society will develop. Cash flow of $189 billion is deployed.

“I think the CEO should be someone who can think about buying companies, buying stocks, and doing all sorts of things that might come up at a time when no one else is willing to move “, did he declare.

Abel played a significant role in Berkshire's acquisitions, including the purchase of PacifiCorp in 2006 and Dominion Energy's pipeline business in 2020. Buffett revealed at the annual general meeting that Abel also played a role in Berkshire's failed takeover bid for technology distributor Tech Data in 2020. 2019.

It was unclear whether Abel would want to manage the common stock portfolio himself, or simply have the investment managers report to him, allowing them to make their own trades.

Last year, Abel told CNBC that Combs and Weschler managed their own portfolios “and it always will be, and they will manage it accordingly.”

“I can ask them, ‘That was really interesting. What sparked your interest?' said Abel of his conversations with Combs and Weschler about their stock investments. “But that’s all that’s happening. And in addition to having relationships with both of them, which is important, it's their portfolio.

Buffett has explained in recent years that he shares similar views on capital allocation to Abel, who rose through the ranks of the company's utilities sector and now oversees all of its non-utility operations. insurance as vice president. He added that his decision was influenced by the sheer size of Berkshire. “We don't want to try to have 200 people 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 “some 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 yet about public investment,” Rossbach said. “This will be part of this ongoing transition, to learn more about how this business is going to be structured, and then also how Greg Abel envisions it.”

Compared to previous years, Abel took on a larger role at Saturday's meeting, the first since Buffett's longtime business partner and Berkshire vice chairman. Charlie Munger died in November. Buffett also turned over the official part of the day – when shareholder proposals were voted on – to Abel to lead, citing problems with his own voice and eyesight.

Abel spent the day sitting next to Buffett on stage for the morning and afternoon sessions; vice-president Ajit Jain, who manages the insurance operations, only came for the first part of the day. Abel seemed relaxed as he talked about BNSF railroad's performance, how Buffett approached his investment in Occidental Petroleum, as well as how he handled wildfire litigation — including his efforts to make pass state laws that would limit its responsibilities in the future. disasters.

“We don't want to throw good capital at bad capital,” Abel said of the utilities sector after the wildfires, repeating a comment Buffett made in his February annual letter. “We will be very disciplined there.”

Investors view Abel as a strong operator of Berkshire's underlying business, helping to improve the company's margins and profitability, a point Buffett credited to him on Saturday.

“If you have 20 kids and you're very rich, you're going to have some who are go-getters and some who aren't going to be go-getters anyway,” Buffett said. “We're a very, very wealthy company and we haven't had a history of being very hard on people that we've been around.”

“Greg will do something,” he added.

At first, Buffett mistakenly called Abel “Charlie” when he asked him a question. The packed arena – so full that hundreds of people sat behind the stage, unable to see Buffett in the flesh – erupted in thunderous applause.

“I’m so used to it. . . » he said, before laughing. “I’ve already checked myself several times. I'm going to slip again.

When asked what he would do if he had one more day with Munger, Buffett replied, “We had a lot of fun doing whatever.” We would play golf together. We would play tennis together. We did everything together. . . we had just as much fun, maybe even more to a certain extent, with things that failed because then we really had to work.

Munger's death underscored the fact that there may not be many more meetings with Buffett. Dominic Evans, who traveled to Omaha from London, waited in line at 4:45 a.m. to get a good seat. He said he wanted to come “show support” for Buffett.

“Bring out the Kleenex this year because, you know, you lost someone who is a great teacher,” he said. “Fortunately, much of his material is already available. . . but, you know, it's going to be irreplaceable.

Buffett acknowledged his mortality several times on Saturday. He told shareholders: “I hope not only that you will come next year, but I hope that I will come next year.” »