OMAHA, Neb.– Everyone knows that Warren Buffett’s successor will not be able to match the legendary investor, but Berkshire Hathaway’s board remains convinced that Greg Abel is the right man to one day lead the conglomerate into the future.
Ron Olson, a former Berkshire board member, told investors Thursday at a conference two days ahead of the company’s annual shareholder meeting that Abel understands all the fundamental principles that guided Buffett, such as letting Berkshire’s businesses largely run themselves. And Abel will work to manage Berkshire in a conservative manner that protects the company known for its financial strength, he said.
“Greg is not someone who is going to create as much of a following in the press as I think Warren has had,” Olson said. “On the other hand, I have every reason to believe that he will lead the companies we are responsible for in the same way that Warren has led them.”
Olson said he is confident business owners will still be willing to sell their companies to Berkshire once the Canadian utility takes over after the 93-year-old Buffett is gone.
Olson said he doesn’t think last year’s public legal battle with the billionaire Haslam family over how much Berkshire would ultimately pay for the last 20% of the Pilot Truck Stop chain that the family wanted to sell to Buffett will be a deterrent either. for future deals. . Both the Haslams and Berkshire accused each other of trying to manipulate Pilot’s earnings to influence the final price of $2.6 billion.
Business owners considering selling can display all the positive and respectful relationships Berkshire has with its dozens of other subsidiaries in the 200,000-square-foot exhibit hall 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 top law firm, the opportunity to work closely with Abel, further building his confidence in the board’s chosen successor.
“I can tell you that his preparation and thinking were impressive. He is strategic in his thinking. And he is decisive in his judgment,” Olson said.
Moreover, Berkshire has more than $167 billion in cash, so it has plenty of resources to make deals and, Olson said, “people generally like to be paid in cash.”
Abel, who keeps a low profile and normally doesn’t give interviews, will answer questions alongside Buffett for hours on Saturday, trying to fill the role that Buffett’s 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 dissect a company’s balance sheet as quickly and accurately as Buffett, and that he is also a great listener that people enjoy working with.
But, Olson said, “Greg won’t be as entertaining as Warren and Charlie have been over the years.”
So Munger’s absence will be acutely felt on Saturday by all the thousands of people attending the meeting. There is simply no way to replace the expertise, advice and friendship that Munger provided to Buffett for more than six decades.
Professor Lawrence Cunningham, who has written several books about Berkshire, said he thinks that even with Munger’s big loss, 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 thinks Buffett and Munger have built an organization bigger than themselves that will endure.
Olson said Berkshire’s board knows there simply isn’t another Warren Buffett or Charlie Munger to replace these two men.
After Buffett’s death, Berkshire will come under pressure as its shareholder base evolves to include more index and activist investors. One of the things investors can demand is 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 has not ruled out paying a dividend at some point in the future, but has also not seriously considered approving one now with Buffett still at the helm.