A post-Buffett Berkshire Hathaway is Omaha’s focus after Munger’s passing

By Amanda Albright and Isis Almeida

The annual meeting of Berkshire Hathaway Inc. on Saturday gave shareholders a glimpse of how the conglomerate will operate without Charlie Munger, who died last year at age 99. Then came the questions: How will it operate without Warren Buffett?

With the billionaire investor turning 94 this year and Munger’s death in November, succession at Berkshire has become an increasingly pressing issue for shareholders, even after Buffett named his successor in Greg Abel in 2021. But for anyone speculating that Munger’s death might have hastened Buffett’s retirement, he said at the end of Saturday’s event, “Not only do I hope you come next year, but I hope I come next year too.”

Buffett and Munger transformed Berkshire from a failing textile mill into a behemoth spanning industries including insurance, energy and railroads, bringing in billions in revenue — including $11.2 billion in the first quarter — and amassing a huge cash pile that eventually reached a record reached $189 billion. of March. In an economy shadowed by high inflation and uncertainty about interest rate cuts, shareholders who had grown accustomed to Berkshire’s investment success were eager to know how it could continue without Buffett, who has been at the helm for decades.

What would the culture at Berkshire be like under Abel, one wondered, as the vice chairman of the company’s non-insurance business stood on stage with Buffett to answer questions. Would Abel take over the stock portfolio that Buffett manages, another question arose.

“That decision will be made when I’m not there,” Buffett responded, joking that he might try to pursue those who do it differently than him. “I would leave the capital allocation to Greg. He understands companies extremely well, and when you understand companies, you understand common stocks.”

Abel’s more than two decades of experience at the conglomerate includes closing high-profile deals and overseeing its extensive non-insurance businesses, from the BNSF Railroad to Dairy Queen. But Buffett’s aphorisms and status as the Oracle of Omaha have earned him a reputation as the paternal face of capitalism, and earned him a following that Abel may struggle to match.

Chris Bloomstran, president of Semper Augustus Investments Group, didn’t seem concerned. Abel is a phenomenal leader who will be “a great capital allocator,” he said ahead of the meeting at Gabelli Funds’ annual Omaha Value Investor conference on Friday.

“There is no other Warren Buffett,” he said. “Luckily they have a great board.”

Inevitably, Munger’s absence would play a major role at the meeting, where he stood for decades next to Buffett on stage and entertained the audience with his quips and – sometimes scathing – jokes. On the sidelines of Saturday’s event, investors were clear that there will never be another Buffett or Munger. As skilled as their successors were, the pair brought with them an authenticity and charisma that would be difficult to replace.

Munger tribute

On Saturday, Buffett praised Munger’s love of learning, his ability to find a path out of failure, his insight and wisdom in investing. He’s never seen anyone peak at 99, Buffett said.

“He went everywhere with his mind, and so at 99, not only was he interested in the world, but the world was interested in him,” Buffett said. At one point, Buffett incorrectly referred to Berkshire Vice Chairman Greg Abel as “Charlie” when asking him a question.

While succession was repeatedly discussed, Buffett continued to call for leadership changes at Apple, one of his favorite companies — even as he sold off some of its shares in the first quarter. He noted the strong leadership of CEO Tim Cook, who took over from Steve Jobs.

Munger died in November, just months before his centenary, prompting an outpouring of tributes praising his depth of knowledge, wit and investing acumen. Munger, a lawyer by training, helped Buffett, who was seven years his junior, create a philosophy about investing in companies for the long term.

“I think he’s given all of us permission to tell the honest truth when we can,” John Rogers, co-chief executive officer at Ariel Investments, said at the Gabelli event. “And that’s what I think I take away most from Charlie.”

Under their management, Berkshire averaged annual gains of 20 percent between 1965 and 2022 – about double the pace of the S&P 500 Index. Decades of compounding returns turned the pair of billionaires and folk heroes into admiring investors.

“I think Charlie would be the first to say that if Berkshire were hurt by his departure, they wouldn’t be doing their job,” says Adam Mead, who wrote “The Complete Financial History of Berkshire Hathaway.”

First print: May 5, 2024 | 7:33 am IST