Warren Buffett chose the last minute of his 60th shareholders’ meeting to abandon a long -awaited announcement which was still completely surprising for his fans, most of his board of directors and even his successor.
Buffett, the 94 -year -old architect and face of Berkshire Hathaway Inc., announced that the rally would be his last at the head of the company he built in humble beginnings in one of the most precious companies in the world. A few meters away, Greg Abel, the director of energy, long considered the crown prince of Omaha, was not even aware that his time had come.
Buffett will give the keys to a giant of $ 1.2 billion of dollars, commanding a stock portfolio such as Apple Inc. and American Express Co. in addition to a collection of insurance, energy, railway and consumption companies which regularly produce $ 10 billion per quarter of operational profits. The 62 -year -old man will also inherit a plethora of questions, starting with what he will do with the treasury battery of nearly $ 350 billion in Berkshire after Buffett has largely attended a volatile of recent years on the markets.
The shareholders will want to know how Abel will modify the Idiosyncratic and lean CONNECTION CONNECTION of the company, if it will bring tolerance to the risk or preferences of the different industry, and if the company will remain the first call for companies that need great control and a vote of trust. They will even wonder about the future of the annual meeting itself, the so-called Woodstock for the capitalists who attracted acolytes from around the world on the basis of the wisdom and the spirit of Buffett and its late trading partner Charlie Munger.
“People love Warren because he has a certain magic,” said Alice Schroeder, who wroteThe Snowball: Warren Buffett and Life AffairsThe biography of the billionaire which is considered an essential reading for its admirers and has helped to propel its fame. “Recreating it is almost impossible.”
While few expect what Aube corresponds to the main celebrity of the rue de Buffett and the love of the projectors, the departure of the oldest CEO of the S&P 500 also opens up more in -depth questions on the type of pressure could one day be in its absence.
Berkshire does not pay dividend and has recently started to buy actions, Buffett counting on his history to show that he could worsen shareholders’ money at a better rate than wider markets would offer.
And Berkshire has reached such a HEFT – with nearly 400,000 employees – and has so many disparate companies that some observers have debated over the years, if it could be broken after the departure of Buffett.
Abel argued that he will follow the principles that Buffett presented in investment and risk management. And Buffett said that he would remain a major shareholder.
One thing that “investors will have to confuse is the notion of: Berkshire Hathaway deserves the Buffett bonus when Buffett is no longer there?” said Cathy Seifert, CFRA research analyst. “There could be a laundry list that certain institutional investors have which include the payment of a cash dividend and a more regular capital allowance program.”
Dealmaker Energy
Abel joined Berkshire Hathaway by acquisition.
The executive of Canadian origin who started his career as an accountant for PricewaterhouseCoopers then joined the Geothermal Electricity Company Calenergy in 1992 as a controller.
David Sokol, CEO of Calenergy at the time, had ambitions to create the company through acquisitions and saw talents in Abel. In 1996, he sent Abel to direct a public electric service to the United Kingdom that the company had bought. Calenergy concluded an agreement in 1998 to buy Midamerican Energy, a public service in Iowa, and adopted its name.
Berkshire took on a majority participation shortly after, allowing the company to make a wave of acquisition, snatching pipelines following the bankruptcy and public electrical services of Enron Corp. in the northwest of the United States.
In 2008, Sokol played a wider role in Berkshire and Abel was appointed CEO of Midamerican. Buffett had reservations to find out if he could find and negotiate agreements, according to Sokol.
“I knew the answer to this, because he had participated in all the acquisitions we had made and he had managed some practically alone,” said Sokol in a 2014 interview. “I think Warren and some of our members of the board of directors were not sure because they had not experienced it with him.”
In a few months, Abel demonstrated his chops. In September 2008, Midamerican agreed to pay around $ 4.7 billion to buy Constellation Energy Group Inc. after the Baltimore -based electricity company lost half of its market value in a week. Berkshire reported more than a billion dollars based on rupture and profit costs on his investment after the constellation turned to another pretender.
The other Abel transactions have proven to be more durable. In 2013, he bought the largest electrical service in Nevada, NV Energy, and the following year, Abel agreed to buy an electrical transmission company in his native Alberta. The name of Midamerican was then changed for Berkshire Hathaway Energy in 2014 to align the brand more closely with the reputation and the values that Buffett defended during his career for several decades.
Expansion led to the creation of a sprawling public service company, keeping the lights on in states such as Iowa and Nevada and natural gas pipelines that roamed around 14,200 miles across the country, from Texas to Michigan.
This helped him acquire the reputation of a manager of qualified public services and, ultimately, to gain the confidence of Buffett. In 2018, he was promoted to vice-president, expanding his surveillance to all the non-assurance operations of Berkshire Hathaway, a program that extends the BNSF railway operator to Sweets Maker.
It was announced as the successor pending in 2021, after Munger let slide during the annual meeting of Berkshire that Aubel would keep the culture of the intact conglomerate after Buffett moves.
Since its promotion, operating income – excluding insurance for a few other items – have inflated by around 27% to almost $ 22 billion last year.
Now what remains to be seen is its sense of investment. Todd Combs and Ted Weschler were hired in 2010 and 2011, respectively, to help manage Berkshire’s shares and obligations. Combs has since monitored the Geico insurance unit. The two advised Buffett on potential controls and can do the same for Abel.
“Greg is the business manager, he is not responsible for investing,” said Schroeder. “It will be one of its greatest challenges and the greatest challenges of the Council.”
Representing a treasure of nearly $ 350 billion to invest, the executive does not have a selection assessment. During the meeting on Saturday, he was asked about his capital allowance strategy when he takes over. He described the pile of cash for a “huge asset” and promised continuity. But his approach to the answer was not what the regulars of Berkshire were used to.
“He had a hard time on this issue,” said Cole Smead, a shareholder of Berkshire Hathaway.
“I thought that Charlie and Warren, he would think at a previous moment in his life and told a story about something he had experienced in the investment,” said Smead. “He didn’t do it.”
This story was initially presented on Fortune.com
