Bye Bye Buffett?

Not quite yet - Berkshire Hathaway announced that Greg Abel would become the next CEO when Warren Buffett departs the scene, and this is a net positive

Greggory Warren, CFA 3 May, 2021 | 1:29PM
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Warren Buffett

We were a little surprised to see wide-moat rated Berkshire Hathaway (BRK.A) (BRK.B) be actually announce today that Greg Abel would be CEO Warren Buffett's successor once he departs the scene. The surprise, though, was in the timing of the announcement (which apparently was forced by a slip-up on Charlie Munger's part during the annual meeting this past weekend) as opposed to the announcement itself, both of which have had a positive impact on the stock, as it removes one of the major uncertainties hanging over the company.

We have long believed that Abel was the most likely successor to Buffett, given his age (59)--which satisfies Buffett's criterion that the company's next "CEO should be relatively young, so that he or she can have a long run in the job"--and his combination of both operational and capital allocation experience during his years at Berkshire Hathaway Energy. With the company's next CEO expected to fill the role of capital-allocator-in-chief, there were two strong candidates in line to take the top job (at least from the time they've spent with the company and their understanding of what Buffett wants the next capital-allocator-in-chief to do): Ajit Jain, who oversees all of Berkshire's insurance operations, and Abel, who has stewardship of the noninsurance businesses. 

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About Author

Greggory Warren, CFA

Greggory Warren, CFA  Greggory Warren, CFA, is a financial services sector strategist for Morningstar.

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