Warren Buffett exits CEO role at Berkshire Hathaway after decades
Warren Buffet has handed Berkshire Hathaway’s reins over to Greg Abel, after six decades as CEO of the company. In those six decades, the company has gone from being a struggling textile mill to a $1.1trillion financial behemoth that spans railroads, utilities and insurance operations.
The company has more than $350 billion in cash and short-term treasuries and $283 billion in publicly traded stock. Investors will be scrutinizing how Abel allocates the almost $900 million cash that flows in from its businesses each week.
“He’s inheriting the most privileged place in American business,” said Christopher Davis, a partner at Berkshire investor Hudson Value Partners. “Buffett was not only a great investor but someone people looked up to for doing the right thing and dealing fairly and that gave Berkshire some pretty broad latitude.”
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Investors are keen to see whether Abel, a longtime Berkshire executive will carry on with Buffet’s investing philosophy, which meant in recent times that the company passed on several big-ticket deals and avoided many flashy tech investments.
The decision whether to launch quarterly earnings calls or provide better qualitative insight into how individual units are performing–something investors had been asking Buffet for of late–now lies with Abel.
Abel, a Canadian who rose up through Berkshire’s utilities division, has signaled the company’s investment philosophy will not change when he takes over. He told investors last year that he would continue to target businesses that generate significant cash flows and the company’s long-term investment horizon would remain intact. He added Berkshire would still need to have a view on the economic prospects of a company in 10 or 20 years before investing, whether buying a business outright or when purchasing a minority stake.
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“It is really the investment philosophy and how Warren and the team have allocated capital for the past 60 years,” Abel said last May. “It will not change and it’s the approach we’ll take as we go forward.”
Buffett has said he’s “going quiet” as he steps back, signaling a reduced public presence even as he remains chairman. Abel will assume responsibility for Berkshire’s annual shareholder letters, a tradition Buffett began in 1965 that became essential reading on Wall Street for its plainspoken lessons on markets, management and capital allocation.
“Warren, as chairman, will be an advisor to Greg, a cultural anchor, and a real long term thinker,” said Ann Winblad, managing director at Hummer Winblad Venture Partners and longtime Berkshire shareholder, on CNBC’s “The Exchange.” “Will the company fundamentally change in its strategies? No. The culture of Berkshire Hathaway, which is what I’ve invested in, which is patient, long term, careful and decisive investing, will probably still remain.”