Buffett delivers to his successor a giant pile in cash and many questions

Warren Buffett chose the final minute of his 60th shareholder meeting to leave such an anticipated announcement that he was still completely amazing for his fans, most of his advice and even his successor.

Buffett, the 94 -year -old architect and face Berkshire Hathaway Inc., announced that the meeting would be his last as head of the company he built from the humble beginnings in one of the most valuable companies in the world. A few meters away, Greg Abel, the energy executive who was seen as Prince Colonel of Omaha, was not even aware that his time had come.

Buffett will deliver the keys to a Behemoth of 1.2 trillion dollars, commanding a stock portfolio such as Apple Inc. and American Express CO., in addition to a collection of insurance, energy, railways and consumer companies that regularly obtain $ 10 billion per quarter for the operational benefit. The 62 -year -old young man will also inherit a large number of questions, from what he will do with the Berkshire’s almost $ 350 million cash pile after Buffett was largely in the will of recent years in the markets.

Shareholders will want to know how Abel will change the company’s lean and lean suite, whether it will provide a different risk tolerance or industry preferences, and if the signature will continue to be the first call to companies that need great control and a vote of trust. They will even ask about the future of the annual meeting, the so-called Woodstock for capitalists who attracted acolytes from all over the world based on the wisdom and wit of Buffett and his missing business partner Charlie Munger.

“People love Warren because they have a certain magic,” said Alice Schroeder, who wroteThe Snowball: Warren Buffett and the Life BusinessThe biography of the billionaire, which is considered an essential reading for his admirers and helped to promote his fame. “Recreation -it’s almost impossible.”

Although few expect that Abel will coincide with the celebrity and love of the main street of Buffett, the departure of the longest CEO of the S&P 500 also opens deeper questions about what type of pressure could one day come to their absence.

Berkshire does not pay a dividend and only recently started buying shares, with Buffett trusting in his career to show that he could compose the money of shareholders at a better rate than the wider markets offer.

And Berkshire has reached this weight (with about 400,000 employees) and has so many disparate businesses that some observers have debated over the years if you can break after Buffett leaves.

Abel has maintained that the principles that Buffett has set in investment and risk management will follow. And Buffett said he will remain a major shareholder.

One thing that “investors will have to face is the notion of: Berkshire Hathaway’s actions still deserve Buffett’s premium when Buffett is no longer there?” Cathy Seifert, CFRA research analyst. “There could be a laundry list that some institutional investors include payment of a cash dividend and a more regular capital allocation program.”

Energy Manufacturer

Abel joined Berkshire Hathaway through an acquisition.

The Canadian executive who began his career as an accountant of Pricewaterhousecoopers later joined Geothermal Power Company Calenergy in 1992 as a driver.

David Sokol, CEO of Calenergy, at that time had ambitions to build the business through acquisitions and saw talent in Abel. In 1996, he sent Abel to lead an electric utility in the United Kingdom that the company had bought. Calenergy reached an agreement in 1998 to buy mid -American energy, a utility at Iowa and adopted its name.

Berkshire took a control participation shortly after, allowing the company to go to an acquisition, snatching pipes following the bankruptcy and Electrical Services of Enron Corp in the north -west of the United States.

In 2008, Sokol played a broader role in Berkshire, and Abel was appointed Mid -American CEO. Buffett had reserves on whether he could find and negotiate offers, according to Sokol.

“I knew the answer to this, because he had participated in all the acquisitions we had made and had managed a couple of them almost alone,” Sokol said in an interview in 2014. “I think Warren and some of our council members were not sure just because they had not experienced it.”

After months, Abel showed his ribs. In September 2008, Midamerican agreed to pay about $ 4.7 billion to buy Constellation energy Group Inc. After the Baltimore -based electricity company lost half its market value in a week. Berkshire obtained more than $ 1 billion with a rupture rate and a benefit from its investment after the constellation went to another suitor.

The other Abel offers were lasting. In 2013, he bought the largest Electric Utility in Nevada, NV Energy, and the following year Abel agreed to buy a electric transmission company at his native Alberta. Midamerican’s name was later changed to Berkshire Hathaway Energy in 2014 to align the mark more closely with the reputation and values ​​that Buffett was during his career for decades.

The expansion led to the creation of a U.S. useful company, maintaining the lights in states like Iowa and Nevada and operating natural gas pipes that travel around 14,200 miles across the country, from Texas to Michigan.

This helped him to gain the reputation of a specialized utility executive and finally gain the confidence of Buffett. In 2018, he was promoted to Vice President, expanding his supervision to all non -insurance operations of Berkshire Hathaway, a remedy that covers the BNNSF railway operator to the See See iconic sweets manufacturer.

He was announced as the successor waiting in 2021, after Munger slipped into the Berkshire annual meeting that Abel would keep the conglomerate culture intact after Buffett went down.

Since its promotion, the operational results, excluding insurance, some other articles, have increased by about 27% to almost $ 22 million last year.

Now, what is left to see is your investment. Todd Combs and Ted Weschler were hired in 2010 and 2011, respectively, to help manage Berkshire actions and bond farms. Since then, COMBS has taken the supervision of the Geico Insurance Unit. Both have advised Buffett about possible acquisitions and May to do the same for Abel.

“Greg is the business leader, he is not invested,” said Schroeder. “This will be one of theirs and the most important challenges of the Council.”

He delivered a cash tour of about $ 350 million to invest, the executive has no stock collection history. During the meeting on Saturday, he was asked about his capital allocation strategy when he takes care of. He called the cash stack an “enormous asset” and committed to continuity. But his response to the answer was not what Berkshire’s regular have become accustomed to.

“He fought for this matter,” said Cole Smead, a Berkshire Hathaway shareholder.

“I thought like Charlie and Warren, I would look back in a long time in his life and tell a story about something he had experienced in the investment,” Smead said. “He didn’t.”

This story originally presented to Fortune.com

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