WARREN Buffett on Monday assured Berkshire Hathaway shareholders they should stick around as he prepares to depart as chief executive, giving a full-throated endorsement to his successor Greg Abel and promising to remain a major shareholder.
In a letter to Berkshire shareholders, likely his last before he steps down at year-end, the 95-year-old Buffett said he will be “going quiet” as Abel takes the lead in communicating with them.
Buffett also downplayed recent declines in Berkshire’s stock price, saying Abel has “more than met” his high expectations when he first thought the 63-year-old was CEO material, and simply needs time to gain investors’ confidence.
“I can’t think of a CEO, a management consultant, an academic, a member of government – you name it – that I would select over Greg to handle your savings and mine,” Buffett wrote. “He is a great manager, a tireless worker and an honest communicator. Wish him an extended tenure.”
Abel will take over writing Berkshire’s annual shareholder letters and leading its annual meetings. Buffett, who will remain chairman, plans to keep communicating with shareholders around the Thanksgiving Day holiday.
“As the British would say, I’m ‘going quiet,’” Buffett wrote.
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He nonetheless said “to my surprise, I generally feel good,” and that “though I move slowly and read with increasing difficulty, I am at the office five days a week where I work with wonderful people.”
Buffett expects shareholders to gain confidence in Abel
Buffett has led Berkshire since 1965, transforming it from a failing textile company to a US$1.07 trillion conglomerate with nearly 200 businesses.
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In his letter, Buffett announced plans to speed up his charitable donations to family foundations led by his daughter Susie, 72, and sons Howard, 70, and Peter, 67.
He assured that the change “in no way reflects any change in my views about Berkshire’s prospects.”
Referring to longtime second-in-command Charlie Munger, who died in 2023, Buffett also said he wants to keep a significant number of Class A shares “until Berkshire shareholders develop the comfort with Greg that Charlie and I long enjoyed.”
“That level of confidence shouldn’t take long,” Buffett added. “My children are already 100 per cent behind Greg as are the Berkshire directors.”
Buffett donated more than US$1.3 billion of Berkshire stock, the equivalent of 1,800 Class A shares, on Monday to four family foundations led by his children. He has donated more than half his Berkshire shares since 2006, mainly to the Gates Foundation, but still owns close to 14 per cent of the Omaha, Nebraska-based conglomerate’s stock. Buffett is worth US$148.2 billion, according to Forbes magazine.
Berkshire premium has eroded
Berkshire’s share price has fallen 8 per cent since early May, when Buffett unexpectedly announced he would step down, while the Standard & Poor’s 500 has risen 20 per cent.
Investors believe that this eroded much of the “Buffett premium” embedded in Berkshire’s stock because of the presence of arguably the world’s most revered investor.
In his letter, Buffett said Berkshire’s stock price will move “capriciously,” but “don’t despair: America will come back and so will Berkshire shares.”
Even so, Buffett said Berkshire’s businesses collectively have “moderately better-than-average prospects,” and investors should not expect Berkshire to trounce the market as it did when it was small.
“Our size takes its toll,” Buffett said. “Because of Berkshire’s size and because of market levels, ideas are few – but not zero.”
Abel has been a Berkshire vice-chairman overseeing non-insurance operations since 2018, and was publicly designated Buffett’s expected successor in 2021.
He has drawn wide praise from Berkshire business leaders for his management skills, and taken on more of Buffett’s work, which includes allocating capital. Buffett said Abel understands many Berkshire businesses “far better than I do.”
Children to oversee Buffett’s remaining fortune
After Buffett dies, his children will oversee a charitable trust that will contain nearly all of his remaining wealth, and have about a decade to give it away.
Successor trustees have been named if they cannot serve. Donations to the Gates Foundation will stop.
Berkshire-owned businesses include Geico car insurance, the BNSF railroad, an array of energy and industrial businesses, and familiar retail brands such as Dairy Queen, Fruit of the Loom and See’s Candies.
The conglomerate also ended September with US$283.2 billion of stocks including Apple and American Express, and US$381.7 billion of cash. REUTERS
