At Berkshire Hathaway’s (BRK.B:NYSE) shareholder meeting on 3 May, Warren Buffett announced plans to step down as chair and chief executive after six momentous decades at the helm of the Omaha-headquartered conglomerate.

The 94-year-old stunned the assembled throng of devotees by declaring it was time for his successor Greg Abel to step into his shoes at the end of the year.

One of the biggest challenges facing Abel and Berkshire is finding opportunities to deploy its burgeoning cash pile, which amounted to a record $347.7 billion at the last count.

Following this seismic news for the investment community, Shares asked the fund managers who contributed to our January 2024 ‘Beyond Buffett’ feature for their views on the implications for Berkshire Hathaway of the great man’s retirement.

GREG IS VERY ABEL

Keith Ashworth-Lord manages the CFP SDL UK Buffettology Fund (BF0LDZ3), which pursues the quality-focused ‘Business Perspective Investing’ approach championed by the ‘Sage of Omaha’ and counts Berkshire among its top 10 holdings.

He believes Abel will be a good operations man, having earned the respect of the subsidiary management and a reputation as a hard taskmaster.

‘He has been overseeing investment at Berkshire Hathaway Energy and been heavily involved in the acquisition of the interests in Japan,’ said Ashworth-Lord. 

The Buffettology manager pointed out responsibility for the investment side of the business will now pass to Todd Combs and Ted Weschler, both of whom are ‘well proven in this task to date’, while Ajit Jain will remain in overall charge of Berkshire’s Insurance operations.

‘It is important to realise this succession has been planned for a long time,’ continued Ashworth-Lord. ‘The intention was always to build a business that would outlast its architects. When Buffett passes on the chairmanship, his son Howard will be charged with maintaining the culture of the business. Likewise, the shareholder base is fully supportive of the somewhat quirky nature of Berkshire in the context of other publicly-quoted companies. As long as the performance continues, this is unlikely to change.’

FORTRESS BALANCE SHEET

Nick Brind is lead manager of investment trust and Berkshire shareholder Polar Capital Global Financials (PCFT). His assessment is that ‘everything has changed, yet nothing has changed’.

‘As Buffett is staying on as chairman, there will be little change as, in reality, he had stepped back from day-to-day responsibility for Berkshire’s vast array of businesses a few years ago, delegating to Abel.

‘However, for those who have made the long trip to Omaha every May to hear his and Charlie Munger’s views, until Munger passed away in 2023, it is the end of an era, and next year will likely be much quieter.’

Brind explained that Berkshire will continue to be the owner of a fantastic set of businesses, particularly in insurance, along with stakes in the likes of American Express (AXP:NYSE), Apple (AAPL:NASDAQ), Coca-Cola (KO:NYSE).

‘But as Buffett has said time and time again, the size of Berkshire, with over $1.1 trillion in assets, has made it very difficult to find opportunities to deploy its surplus capital in any size that could move the needle,’ observed Brind. ‘However, sitting on $350 billion in cash and T-bills, a record as a percentage of assets, it has a fortress balance sheet. That gives it a huge strategic advantage for when the tide next goes out.’

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