Everybody knows Warren Buffett the successor will not be able to compare with the legendary investor, but Berkshire Hathaway The board remains confident that Greg Abel is the right person to one day lead the conglomerate into the future.
Ron Olson, a longtime Berkshire board member, told investors gathered at a conference Thursday, two days before the company’s opening. annual meeting of shareholders that Abel understands all the fundamental principles that guided Buffett, such as allowing Berkshire companies to run themselves. Abel will seek to manage Berkshire in a conservative manner that protects a company known for its financial strength, he said.
“Greg is not someone who will be able to build as much of a following in the press as I think Warren had,” Olson said. “On the other hand, I have every reason to believe that he will run the companies we are responsible for the same way Warren ran them.”
Olson said he is confident business owners will still be willing to sell their companies to Berkshire once the Canadian utility’s chief takes over following the departure of 93-year-old Buffett.
Olson said he doesn’t think last year public legal struggle with billionaire Haslam’s family over how much Berkshire will ultimately pay for last 20% The Pilot truck stop chain, which the family agreed to sell to Buffett, will also act as a deterrent to future deals. Both the Haslams and the Berkshires accused each other in an attempt to manipulate Pilot’s earnings to influence the final price of $2.6 billion.
Business owners considering a sale will be able to see all of Berkshire’s positive and respectful relationships with dozens of other subsidiaries in a 200,000-square-foot showroom adjacent to the arena where Saturday’s meeting will be held, Olson said.
In fact, the legal battle gave Olson, who is a partner at Berkshire’s main law firm, the opportunity to work closely with Abel, giving him even more confidence in the board’s chosen successor.
“I can tell you his preparation and mindset were impressive. He has strategic thinking. And he is decisive in his judgment,” Olson said.
Plus, Berkshire has more than $167 billion in cash, so it has plenty of resources to make deals, and, according to Olson, “people generally like to be paid in cash.”
Abel, who keeps a low profile and usually doesn’t give interviews, will spend hours answering questions with Buffett on Saturday in an effort to help Buffett take his place. longtime partner Charlie Munger held for decades before he died last fall. Abel has overseen all of Berkshire’s diverse non-insurance businesses for several years, while another vice chairman, Ajit Jain, oversees the insurance businesses, including Geico and General Reinsurance.
Olson said Abel is a numbers guy who can analyze a business’s balance sheet as quickly and well as Buffett, and he’s a great listener who people enjoy working with.
But, according to Olson, “Greg won’t be as interesting as Warren and Charlie have been for many years.”
So Munger’s absence on Saturday will be keenly felt by all the thousands of people who attended the meeting. There is simply no substitute for the experience, advice and friendship that Munger offered Buffett over more than six decades.
Professor Lawrence Cunningham, who has written several books on Berkshire, said he believes even though Munger’s profound loss will occur, the company he helped build will survive.
“The chair is empty. There is no way to fill it. But I am also confident that Warren – and especially Greg and Ajit – will carry on the torch,” Cunningham said.
Berkshire has struggled with succession issues for decades, but Cunningham said he believes Buffett and Munger have created an organization larger than themselves that will stand the test of time.
Olson said Berkshire’s board knows there is no Warren Buffett or Charlie Munger to replace those two.
Following Buffett’s death, Berkshire will face pressure as its shareholder base expands to include more index and activist investors. Investors could demand that Berkshire change its long-standing policy and start paying a dividend if it can’t put all that money to good use.
Olson said the board hasn’t ruled out paying a dividend at some point in the future, but it’s also not seriously considering approving a dividend now that Buffett is still at the helm.