“I think it’s time for Greg (Abel) to become the company’s chief executive at the end of the year,” Buffett said.
Investor and billionaire Warren Buffett told the arena full of shareholders on May 3 that he would leave by the end of the year, and has been running the Berkshire Hathaway Company, which made him a world-renowned investor for nearly 60 years.
Buffett said his company’s vice-chairman, Greg Abel, would recommend that he be replaced in a discussion with the Berkshire Hathaway board on Sunday.
“I think it’s time for Greg to become the company’s chief executive at the end of the year,” Buffett said.
Abel was Buffett’s designated successor for many years, but it was expected that Buffett would not take over until his death, while managing many of Berkshire’s uninsured businesses. Plus, Buffett, 94, has always said he has no intention of retiring.
The announcement of his retirement came at the end of a five-hour question-and-answer period, and Buffett did not ask any questions about the topic. The only officers he knew beforehand were his two children, Howard and Susie Buffett.
Abel, who was located next to Buffett on stage, had never known before. An hour later, Abel returned without a boss and held a formal business meeting for Berkshire Hathaway, where he responded to the news.
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“I just want to say that as we moved forward, we couldn’t be humbled and honored to be part of Berkshire,” Abel said.
Many investors have expressed confidence in Abel’s ability to run the company, but it is not yet clear how this will extend to Berkshire’s funding investment. On Saturday, Buffett supported his successor and promised to continue investing his money in the company.
“We don’t intend to sell a single share of Berkshire Hathaway, and we’ll ultimately pass it on,” Buffett said. “The decision to maintain all share is an economic decision because I think Berkshire’s outlook is better under Greg’s management than mine.”
After announcing his retirement, Buffett met standing ovations from thousands of investors at Omaha Arena, leading the company for 60 years and celebrated it.
During his tenure, Berkshire almost doubled the S&P 500’s return, combining an annual growth rate of 19.9% compared to an index’s 10.4% increase.
Meanwhile, Buffett copied his investments and attracted dedicated supporters of investors who moved across the market whenever his plans were published.
Abel has already managed much of Berkshire for many years, but that doesn’t involve making company insurance services or cash investment decisions. Once he takes on these tasks, Vice Chairman Ajit Jain will remain to help manage the insurance company.
Before Buffett announced his retirement, Omar Malik, investment manager at London’s Hosting Partners, said he was not worried about Berkshire’s future under Abel.
“He spent a lot of time with Warren and had the opportunity to learn about the business,” Malik said. “The question is, will he allocate capital as dynamically as Warren’s, the answer is no. But I think he’ll do a great job with the support of others.”
Cole Smead of Smead Capital Management said that Buffett’s retirement was not a surprise after seeing him on Saturday. The 94-year-old accidentally made a basic mathematics mistake in one of his answers. At another time, Buffett went on a seemingly off track and told of how he invested his year without directly answering the questions asked.
Abel has been highly regarded among Berkshire managers and has received praise from Buffett for his business insight, but it would be difficult for him to match his boss’ performance, especially as he lacks 30% control over the stock of the company he currently owns.
“What happened in the last 30 or 45 days… there’s really nothing,” Buffett said. “This wasn’t a dramatic bare market or anything like that.”
Veteran investors are displeased in the short term, but not because of panic, highlighted by dramatic market fluctuations.
“You need a slightly different investment philosophy if your stock is falling 15% or not, if it makes a difference to you,” he said. “The world is not going to adapt to you. You have to adapt to the world.”
Tom Ozimek and the Associated Press contributed to this report.
