Warren Buffett to exit as CEO: Stakeholders weigh on Berkshire Hathaway’s future under Greg Abel’s leadership
Shareholders of Berkshire Hathaway are contemplating the future of the conglomerate following Warren Buffett‘s unexpected announcement of stepping down as chief executive by year end. While most acknowledging that the company will remain stable under Vice Chairman Greg Abel’s leadership who Buffett endorsed to be his successor, some stakeholders express concern about the absence of Buffett’s unique insight and charisma.
The $1.16 trillion organisation, encompassing 189 operating businesses, $264 billion in stocks and $348 billion in cash, faces uncertainty regarding its trajectory post-Buffett era. The announcement came after the annual meeting’s question-answer session, with the board scheduled to discuss the transition.
“There has been a premium on Berkshire because of Buffett,” said Mark Malek, chief investment officer at Siebert.NXT, as quoted by news agency Reuters. “Will people look at it in the same way?”
Richard Casterline, a computer programmer from Denver, found the news startling and expressed interest in the market’s reaction. He said, “I don’t think (Abel) elicits the same excitement. It’s not any fault of his own, it’s just thinking of who could be as legendary as those two are. It’s just tough shoes to fill.”
Despite concerns, Abel receives substantial support. Daniel Hanson senior portfolio manager at Neuberger Berman expressed complete confidence in Abel’s capabilities, “This is Buffett’s baby, and he thoughtfully and deliberately planned for an orderly succession that does not disrupt the value of his life’s work,” he said, adding, “I have full confidence in Greg’s leadership.”
Richard Lancaster compared the transition to Apple’s leadership change from Steve Jobs to Tim Cook and adding, “You have two different personalities, two different approaches.”
“Greg has all the qualities Warren likes in a manager: very sharp individual, and well-versed in what’s in the business climate today and the changes that will come through disruptive technologies,” he also said.
Under Buffett’s stewardship, Berkshire’s shareholder returns have consistently outperformed the S&P 500 (.SPX). The company’s investment decisions often influenced market movements, even when Buffett wasn’t directly involved.
Abel’s approach suggests possible adjustments. He indicated increased involvement in subsidiary oversight whilst maintaining their autonomy. Berkshire’s diverse portfolio includes Geico insurance, BNSF railway, utilities, Dairy Queen, Fruit of the Loom and See’s Candies, as reported by Reuters.
The new leadership might adopt different approaches to business retention and divestment. Previously, Berkshire sold Applied Underwriters in 2019 and its newspaper holdings in 2020 due to market changes.
