OMAHA,
Nebraska
— Many
Berkshire
Hathaway
shareholders
left
this
past
weekend’s
annual
meeting
pondering
Warren
Buffett’s
big
revelation
about
succession.
The
Oracle
of
Omaha
on
Saturday
told
an
arena
full
of
shareholders
that his
designated
successor
Greg
Abel
will
have
the
final
say
on all
of
Berkshire’s investment
decisions
when
Buffett
is
no
longer
at
the
helm.
“I
would
leave
the
capital
allocation
to
Greg
…
he
understands
businesses
extremely
well,”
Buffett
said.
“If
you
understand
businesses,
you’ll
understand
common
stocks.”
That
single
comment
sparked
a
lot
of
conversation
among
Buffett’s
loyal
followers.
Some
interpreted
it
to
mean
that
Abel,
vice
chairman
of
noninsurance
operations,
will
not
only
make
acquisitions
in
the
future,
but
will
also
pick
stocks
for
Berkshire’s
$360
billion
equity
portfolio.
Others
think
Abel
will
be
more
likely
to
delegate
the
responsibility
of
stock
selection.
“I
think
he
wanted
to
leave
room
for
Abel
to
make
his
own
decisions
in
terms
of
who
will
make
stock
portfolio
decisions,
how
much
of
the
investment
portfolio
to
allocate
to
stocks
and
so
on,”
Haruki
Toyama,
portfolio
manager
at Madison
Investments,
a
Berkshire
shareholder,
told
CNBC.
“Buffett
has
always
said
that
the
CEO
needs
to
be
the
‘chief
risk
officer’
at
any
firm,
and
for
that
to
be
the
case,
there
has
to
be
clear
accountability
at
the
top,”
Toyama
added.
Buffett’s
investment
lieutenants,
Todd
Combs
and
Ted
Weschler,
have
independently
managed
about
$15
billion
each
for
Berkshire
over
the
past
decade.
Many
had
speculated
that
those
two
former
hedge
fund
managers
would
eventually
take
over
the
entire
portfolio.
Buffett
hasn’t
disclosed
their
track
record
in
recent
years,
however.
The
pair
have
also
been
helping
Berkshire
close
deals.
Additionally,
Combs
is
the
CEO
of
Geico,
the
crown
jewel
of
Berkshire’s
insurance
business.
“The
Abel
news
was
a
twist
on
the
view
that
the
duties
would
be
split
between
capital
allocation
and
stock
selection,”
said
Bill
Stone,
Berkshire
shareholder
and
CIO
at
Glenview
Trust
who
was
attending
his
20th
Berkshire
annual
meeting.
‘Used
to
think
differently’
Abel,
61,
became
known
as
Buffett’s
heir
apparent
in
2021
after
Charlie
Munger
inadvertently
made
the
revelation
at
that
year’s
shareholder
meeting.
Abel
has
been
overseeing
large
swaths
of
Berkshire’s
sprawling
empire,
including
energy,
railroad
and
retail,
but
is
known
for
his
expertise
in
energy,
having
worked
at
the
predecessor
of
Berkshire
Hathaway
Energy
since
1992.
Buffett,
who’s
turning
94
in
August,
admitted
himself
that
he’s
changed
his
mind
about
the
succession
plan,
noting
that
his
decision
is
influenced
by
how
much
Berkshire’s
assets
have
grown.
“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.”
In
addition
to
Berkshire’s
enormous
equity
portfolio,
its
pile
of
cash
grew
to
nearly
$189
billion
at
the
end
of
March.
Buffett’s
“answer
….
was
significant
in
that
it
consolidates
a
lot
of
power
around
Abel,”
Cathy
Seifert,
Berkshire
analyst
at
CFRA,
said
in
a
note.
“Throughout
the
meeting
several
questions
related
to
succession-related
issues
arose.
I
clearly
got
the
sense
that
the
firm
was
sensitive
to
this
issue.”
‘Will
not
miss
a
beat’
The
immediate
reaction
in
the
stock
market
was
positive.
Class
A
shares
climbed
0.6%
on
Monday
following
the
weekend
headlines,
including
succession,
a
surge
in
operating
earnings
and
the
record
cash
hoard.
UBS
Berkshire
analyst
Brian
Meredith,
one
of
the
only
few
on
Wall
Street
covering
the
conglomerate,
gave
a
vote
of
confidence
after
the
annual
meeting.
BRK.A
1Y
mountain
Berkshire
Hathaway
“While
we
believe
BRK’s
shares
may
go
down
some
when
Buffett
is
no
longer
CEO,
it
is
clear
to
us
that
fundamentally
BRK
will
not
miss
a
beat
with
Greg
Abel
currently
taking
on
most
of
the
CEO
responsibilities,”
he
said
in
a
note
Monday.
Meredith
also
hiked
his
price
target
on
Omaha,
Nebraska-based
Berkshire,
seeing
Class
A
shares
rising
to
$734,820
from
$722,234
previously.
The
new
forecast
would
translate
into
more
than
20%
upside
and
push
Berkshire’s
total
market
value
above
$1
trillion.
“We
continue
to
believe
BRK’s
shares
are
an
attractive
play
in
an
uncertain
macro
environment.
We
estimate
shares
trade
at
a
~8%
discount
to
intrinsic
value,”
Meredith
said.
—
CNBC’s
Michael
Bloom
contributed
reporting.