Warren Buffett said on Saturday that Greg Abel, his chosen successor, will make the final decisions on where Berkshire Hathaway invests its money when Buffett is no longer leading the company.
“I would leave the capital allocation to Greg and he understands businesses extremely well,” Buffett told a crowd of shareholders at Berkshire’s yearly meeting. “If you understand businesses, you’ll understand common stocks.”
Abel, who is 61, was identified as Buffett’s likely successor in 2021 when Charlie Munger revealed it at a shareholder meeting. Abel has been managing a big part of Berkshire’s business, including energy, railroads, and retail.
Buffett gave the clearest idea yet of his succession plan after years of speculation about who would take over and what roles they would have. Buffett, who turns 94 in August, said he made his decision based on the growing size of Berkshire’s assets.
“I used to think differently about how that would be handled, but I think that responsibility should be that of the CEO and whatever that CEO decides may be helpful,” Buffett said. “The sums have grown so large at Berkshire, and we do not want to try and have 200 people around that are managing a billion each. It just doesn’t work.”
Berkshire currently has nearly $189 billion in cash, and its stock portfolio is worth about $362 billion.
“When you’re handling the sums that we will have, you’ve got to think very strategically about how to do very big things,” Buffett added. “I think the responsibility ought to be entirely with Greg.”
Although Buffett has made it clear that Abel will take over as CEO, there were still questions about who would control Berkshire’s stock portfolio, where Buffett has had big successes with investments in companies like Coca-Cola and Apple.
Berkshire’s investment managers, Todd Combs and Ted Weschler, both former hedge fund managers, have helped Buffett manage a small part of the stock portfolio for about the last ten years. Some thought they might take over that part of the CEO role when Buffett steps down.
But based on Buffett’s latest comments, it seems Abel will have the final say on all investment decisions — including which stocks to buy.
“I think the chief executive should be somebody that can weigh buying businesses, buying stocks, doing all kinds of things that might come up at a time when nobody else is willing to move,” Buffett said.
Abel is seen as an expert in the energy industry. Berkshire bought MidAmerican Energy in 1999, and Abel became CEO in 2008, six years before it was renamed Berkshire Hathaway Energy in 2014.
