Buffett's Successor Buys Berkshire Shares

Greg Abel, the apparent successor to Warren Buffet’s Berkshire Hathaway  (BRK.A)   (BRK.B) , who is intended to serve as the CEO of the conglomerate, bought $68 million of the company’s shares. 

Before the purchase that was revealed in four Form 4 filings on Oct. 3 with the Securities and Exchange Commission, Abel owned relatively few shares of the company for someone in his position.

Until the purchases last week, Abel only owned about $2.7 million of stock or 2,363 of Class B shares and five Class A shares, according to the 2022 proxy statement filed this March.

Abel bought 168 Berkshire Hathaway Class A shares through the Gregory Abel Revocable Trust on behalf of a family trust that includes his wife, children and other family members.

He paid in a range of $405,000 to $408,000 per class A share for the Berkshire stock, which closed Monday at $413,300.

Abel used the proceeds from selling his 1% stake in the company’s Berkshire Hathaway Energy for $870 million to purchase these shares.

Abel began his tenure first at MidAmerican Energy in 1992, becoming its CEO in 2008. Berkshire acquired the company in 1999 and changed its name to Berkshire Hathaway Energy.

In 2018, Abel was promoted to become Berkshire’s vice chairman overseeing its dozens of non-insurance businesses. 

He received $19 million in compensation for each of the past three years, which was set by Buffett.

That amount was also awarded to Ajit Jain, a vice chairman who oversees the insurance businesses of the behemoth.

Unlike other major public companies, Berkshire’s executives do not receive stock compensation. 

Buffett, who has set the policy for the conglomerate’s executives, believes that shares of his company are commodities.

Berkshire’s executives and directors all purchase the company’s shares in the open market like retail investors.

The timing of the stock purchase could be fortuitous since the company’s shares have dropped by 8% so far in 2022, but are still beating the S&P 500,  which has fallen by 22%. 

Shares of Berkshire have fallen by 24% from its March peak.

In 2021, Buffett said publicly that Abel would succeed him. But Buffett, who is now 92, has not indicated when he might retire. Charlie Munger, the right hand man of Buffett who serves as a vice chairman, is 98.

Buffett said that Jain would be next in line.

“The directors are in agreement that if something were to happen to me tonight it would be Greg who’d take over tomorrow morning,” Buffett said. “If, heaven forbid, anything happened to Greg tonight then it would be Ajit. They’re both wonderful guys.”

Warren Buffett’s son, philanthropist Howard Buffett, 67, would likely take over his father’s position on the board. Howard Buffett was been a board member of Berkshire since 1993 and would serve as non-executive chairman. 

Howard Buffett, who runs a charitable foundation and has worked as a farmer, was never in the running to take over Berkshire.

Warren Buffett, along with Bill Gates, founder and former CEO of Microsoft  (MSFT) , and Melinda Gates, were the founders of the Giving Pledge, a pact by several billionaires who commit to donating the majority of their massive wealth during their lifetime or in their wills.

Warren Buffett still owns a 16% stake in Berkshire that is worth about $95 billion. He has already donated half his holdings during the past 16 years to the Bill and Melinda Gates Foundation, plus other philanthropies.

Leave a Reply

Your email address will not be published. Required fields are marked *