Berkshire Hathaway’s annual shareholder meeting is best explained as “Woodstock for Capitalists.” The 18,000-person pilgrimage was hosted by iconic company Chairman, Warren Buffet (age 92) and his ever-entertaining business partner Charlie Munger (age 99). This weekend event has been on my “bucket list” for some time. Someday, Mr. Buffet and Mr. Munger will no longer be center stage - and when you get an opportunity to learn from anyone in their nineties… you take it.
At some point, we will wake up one morning and Warren Buffet will no longer be at the helm of Berkshire Hathaway which he has grown by about 20% annually since 1965. All indications are, on that day, it will be announced that a gentleman by the name of Greg Abel will be running the company - with the exception of the insurance operations at Berkshire Hathaway. Greg is in his early sixties - a time when many people start to ponder what retirement might look like. Friends describe him as a fiercely intelligent, hyper-efficient guy whose work is his life and who hides his talents behind a wall of humility.
Mr. Abel doesn’t speak to reporters any more than he has to, which in the past three decades has been rarely. I did however, read a few comments from Mary Rhinehart, CEO of Berkshire Hathaway owned company - Johns Manville (yes, the same Johns Manville that is in Innisfail, Alberta) a maker of insulation, roofing, and other building products. “It’s on an as-needed basis. If I call or e-mail him, I get a quick response.” She sends a monthly report to Berkshire Hathaway (not that Mr. Buffett ever required it), and there hasn’t been any change under Mr. Abel. “He gathers a deep understanding really quickly,” Ms. Rhinehart says. “I may talk to him one time, and several months later, he’ll remember everything we talked about.” (Globe and Mail)
After spending much of his career tied to the company, he could now be one promotion away from succeeding its legendary Chairman and CEO, Warren Buffett. As a Wealth Advisor, I wanted to get a better understanding of what the future might look like for Berkshire stock. Does Greg have what it takes to fill the shoes of Warren Buffet? Do we buy, sell, or hold for the great people that we help?
Saturday May 8th was game day for the Edmonton Oilers and also the date of Berkshire Hathaway’s annual meeting. People started showing up at 4:00 a.m. to stand in line to attend the meeting that started at 8:30am. I arrived early (but not that early) wearing my bright orange Edmonton Oilers hockey sweater. The sweater turned out to be a great conversation starter with fellow Berkshire Hathaway shareholders.
One shareholder noticed it and told me that Greg Abel was born and raised in Edmonton and is a hockey fan (likely the Edmonton Oilers). Greg graduated from the University of Alberta with a Bachelor of Commerce degree. A few years later, after establishing a great reputation for efficiency, hard work, and the ability to spot opportunities, he became president of a publicly traded company called CalEnergy which was rebranded to MidAmerica.
While at the helm, Abel oversaw a transition to take the company private which saw Warren Buffet, and Berkshire Hathaway acquire a 75% stake for $9 billion US. Abel continued to grow MidAmerica through a series of transitions after that.
One transition was the $2.7 billion purchase of Alberta based electricity transmission provider, AltaLink LP, in 2004. The entire energy division eventually became Berkshire Hathaway Energy.
Warren Buffett had the wisdom to recognize that it would be very difficult for one person to run all of Berkshire Hathaway, so Abel will someday lead all operations of the company - except for the insurance business.
Speaking of wisdom, what would a Berkshire Hathaway meeting be without a few classic meeting quotes from Warren Buffett and Charlie Munger…
“If you want to figure out how to live your life, write your obituary and reverse engineer it."
"Spend less than you earn. Invest shrewdly. Try to keep learning all your life... The great lesson of life is get the toxic people out of our life. And do it fast!"
“The best opportunities arise when other people are doing dumb things. Stock market corrections will happen all the time. It can offer big investment opportunities.”
“The best thing an investor can do is to learn all the time. Knowledge compounds too.”
This final quote does a great job of encompassing what Berkshire Hathaway is all about…
“The key to investing is staying within your circle of competence and stay humble. Don’t overestimate yourself.”
This last quote also sums up Greg Abel... competent and humble. I truly believe that he will continue to do great things when his time comes. When Greg is in charge, I am certain that the annual meeting will look very different (I am so glad that I took the time to attend my first meeting this year). I truly believe that the history of consistent performance, within Berkshire Hathaway, is very likely to continue well into the future. Greg Abel will do great things.
– Brad
Thank you, Joe Castoldo of the Globe & Mail, for the additional information used within my blog.
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