While 40,000 shareholders of Berkshire Hathaway set off in Omaha on Saturday in a standing ovation for Warren Buffett, Greg Abel was one of those who applauded the career of the world’s largest investor.
As they come together for the annual meeting next year, their eyes will be fixed on Abel, the successor sorted on the Buffett as a financial power that he spent six decades to build.
The 62 -year -old man, who has increased through Berkshire public service activities, will be examined in a way that Buffett has largely avoided in recent years, investors trusting yields that have beaten the s& p 500 benchmark over 5.4 million percent in the past 60 years.
Tasks for Abel are twice: maintain the culture that Buffett and his late vice-president Charlie Munger instilled BerkshireWhile putting the group’s record war box.
Investors will take years to find out how Abel presents himself as a capital beneficiary, if he will have the same talent to identify where to move the billions of dollars that take place in Omaha each month, and if he can approach the correspondence of buffett yields.
“I think the bar to replace Warren Buffett is impossible,” said Christopher Bloomstran, president of the investment group and shareholder of Berkshire, Semper Augustus. “Greg will be under a microscope, not so much from the shareholders’ base but the public eye.”
Some of the most powerful financiers in America praised Buffett after his announcement on Saturday, a sign of his gravity to Wall Street.
Jamie Dimon, director general of JPMorgan Chase, told Financial Times that Buffett “represents everything that is good in American capitalism and America itself”, while the boss of Goldman Sachs, David Solomon, said that the investor had “influenced a generation of leaders who benefited from his unusual common sense and his long-term approach.
However, such an acclamation is a sign of the challenge that Abel faces.
Berkshire has trouble for years to identify the appropriate acquisition objectives. Buffett said that he and his team had already chosen everything that is worth buying, but that The evaluations are stretched.
This sometimes won the shareholders, who saw Berkshire lose control against other tenderers or sits on the sidelines. However, Buffett could ultimately be justified if a wave of leverage redemptions following the pandemic, in which the buyout companies paid high prices, legs folded under the weight of the debt and a slowdown saving.
There is also the risk that parts of Berkshire itself will be targeted for the control. But class A actions at the high voting of Buffett, as well as the size of the size of Berkshire, have long been distant from activists and the investment capital sector, which could seek to take a number of hundreds of subsidiaries of the company. And the fact that the trust that oversees Buffett’s actions after his death will slowly give them to charity organizations means that the threats of external investors are unlikely anytime soon.
Abel will have enormous firepower when he takes the reins: Berkshire is seated on nearly $ 350 billion in cash after net sales of around $ 175 billion in shares in the last 10 quarters.
Buffett reminded investors on Saturday that Berkshire was often rinking with opportunities during sales. With the upheaval of the American economy, they could soon be introduced to Abel.
The question is whether it will be more aggressive in searching for targets or will be more connected to the Wall Street manufacturing machine, which Buffett has largely avoided.
The reputation of Buffett was solidified by major calls such as the end of the Dotcom boom in the late 1990s, therefore avoiding carnage when the bubble broke out, and more recently, reducing the actions of the company, in part on evaluation reasons. This raised questions for shareholders until recently, when the market correction and instability made the decision premonitory.
Over time, Buffett said at the meeting on Saturday: “We will be bombed with tenders for which we will be happy that we have the money”. He added: “It would be much more fun if it happened tomorrow, but it is very, very unlikely that it happens tomorrow.”
It remains to be seen the same good will of his predecessor and if he can be visible with all the activities of Berkshire. While he played a decisive role in a Number of major acquisitionsIncluding several energy companies, he has not monitored the stock portfolio of $ 264 billion in the company – one of the jewels of the Berkshire Crown.
“He is not known as an investor,” said Bill Stone, director of investments for the longtime shareholder at Berkshire, Glenview Trust, adding that his confidence in Berkshire was based on his faith in Buffett as a guardian of investor money.
Larry Cunningham, Professor of George Washington University and author of Berkshire beyond Buffettsaid Abel’s commitment to Berkshire’s investment philosophy did not mean that there would be no change under his direction.
“Abel is a guy in operations, while Buffett has adopted a famous approach to leave, trust managers,” he said.
A more informed managing director of functionality could bring advantages to help Berkshire’s subsidiaries to share ideas and expertise, said Cunningham, but it had a risk: would business sellers also want to be acquired by Berkshire?
“Abel was clear that he was attached to the principle of autonomy – he will not get involved,” said Cunningham. “But the Buffett delegation has given managers wanting to justify his confidence. Abel will have to develop this superpower. ”
Few expect that Aubel takes the place of Buffett in the investment firm or develops the cultural cachet which attracted millions of people to Buffett and its philosophy.
Howard Marks, co -founder of Oaktree Capital, believes that it is impossible for anyone to measure with Buffett, which he described as “the most influential investor of all time – Isaac Newton to invest”.
“He said that when he started in the early 1950s, he was able to buy dollars for 50 cents – and he made it easy,” said Marks. “But the fact is that, even if the opportunities were there, no one else did it. There were not several Warren buffetts.”
Additional James Fontanella-Khan report
