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“巴菲特-芒格”时代落幕:伯克希尔继承人选成关注焦点

The end of the “Buffett Munger” era: Berkshire heir selection is the focus of attention

環球市場播報 ·  11/29/2023 20:18

The death of Charlie Munger (Charlie Munger), vice chairman of the board of directors of Berkshire Hathaway (Berkshire Hathaway), heralded the end of an era. This made Warren Buffett (Warren Buffett) the company's only legendary investor, and also made managers operating in their shadow the focus of attention.

Few companies are as closely linked as Berkshire Hathaway's two leaders, Buffett and Munger. Buffett and Munger have known each other for over 60 years. For the past 45 years, they have served as Chairman of the Board and Vice Chairman of Berkshire Hathaway, respectively.

Munger died on Tuesday local time, just five weeks until his 100th birthday. His death made Greg Abel, Berkshire Hathaway's vice chairman of non-insurance business, and Ajit Jain, the head of the insurance business, as Buffett's top advisors.

The two were promoted to Vice Chairman in 2018, but only began taking on more prominent public roles at Berkshire Hathaway's recent annual conference. Obviously, they will take on more heavy responsibilities in the future.

Managers said Abel fully subscribes to Berkshire Hathaway's culture, which includes extreme decentralization, that is, giving broad autonomy to various business units.

This means that large departments such as BNSF Railways and Geico Auto Insurance Company, which have tens of thousands of employees, and small departments such as Borsheims Jewelry, which has about 142 employees, can operate without interference from Berkshire Hathaway headquarters, while Berkshire Hathaway has only about 26 employees.

But Abel and Jain had a different style than Buffett and Munger. At the 2021 Annual Meeting, Jain was asked how he and Abel interacted.

Jain said, “There's no doubt that the relationship between Warren (Buffett) and Charlie (Munger) is unique and cannot be replicated. And we don't interact with each other as often as Warren and Charlie, but we talk to each other about our businesses every quarter.”

Abel said he and Jain often consult with each other, especially when something unusual happened to one of Berkshire Hathaway's businesses.

However, investors say they have full confidence in the two.

Bill Stone, chief investment officer of Glenview Trust, said, “I can't imagine investors not considering what will happen after Buffett leaves in the future. You don't need them to be as good as Buffett or Munger to make Berkshire Hathaway a great company, or even a great company.”

Berkshire Hathaway has yet to comment on this.

CEO-designate

Berkshire Hathaway has been drawing up succession plans since at least 2006. At the time, 75-year-old Buffett told shareholders that the company he had been in charge of since 1965 would prepare for his departure.

Munger inadvertently hinted during Berkshire's 2021 annual meeting that 61-year-old Abel was the CEO-designate. Abel has been with Berkshire Hathaway Energy for 25 years.

Meanwhile, 72-year-old Jain will continue to be responsible for the insurance business.

Buffett once praised these two executives. In a 2013 video, Buffett called Abel a “first-class human being” (a first-class human being) and Jain called a “superstar” (superstar).

Abel is a hockey enthusiast who graduated from the University of Alberta (University of Alberta) in 1984, worked for PwC and the energy company CalEnergy, and joined the then MidAmerican Energy Company (MidAmerican Energy) in 1992, which was acquired by Berkshire Hathaway in 2000.

In 2008, Abel became the CEO of a Chinese and American energy company. During this period, Abel carried out a series of acquisitions and expanded into the renewable energy sector.

Investors will have to wait until Abel takes office to see whether he is willing to divest from his underperforming or mediocre business, or let Berkshire Hathaway begin paying its first dividend since 1967.

Jain is good at pricing risk, especially big risks such as natural disasters. He joined Berkshire Hathaway in 1986.

In addition to these two executives, Berkshire Hathaway's plan also requires Buffett's eldest son, Howard Buffett, to become the non-executive board chairman, mainly responsible for maintaining Berkshire Hathaway's culture.

Todd Combs and Ted Weschler help Buffett manage Berkshire Hathaway's over $300 billion common stock portfolio (about half of which is invested in one stock, Apple), and they expect to take over the entire common stock portfolio.

Bill Smead, chief investment officer at capital management firm Smead Capital Management, said: “Berkshire Hathaway has great people to help select stocks, but this will never be the same.”

Pilgrimage

For shareholders, one symbol of Berkshire Hathaway is its annual general meeting, a pilgrimage known as “Woodstock for Capitalists” (Woodstock for Capitalists), where Buffett and Munger will spend more than five hours answering shareholder questions.

An event like this would draw tens of thousands of people to Omaha (Omaha) in early May, although fans can watch the live stream on their computers or smartphones.

Many shareholders, particularly local shareholders, say they will continue to attend Berkshire Hathaway's annual conference, but others are less sure.

Whitney Tilson is an investor who has managed T2 Partners and Kase Capital, and has attended many annual Berkshire Hathaway conferences. He said, “What really resonates with these people is their advice, which teaches people how to think clearly, be honest with themselves, learn from mistakes to avoid disasters, and live a perfect life.”

In May 2020, at the height of the pandemic, Buffett held the conference online in Omaha, but Munger did not attend.

Buffett said, “This isn't particularly like an annual conference because my partner of 60 years, Munger, isn't here. I think most people who came to our conference came to listen to him speak.”

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
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