Greg Abel, now 61 years old, is expected to replace Buffett and take over Berkshire Hathaway, which has a market value of nearly trillions of dollars.
On November 21, 2023, Buffett admitted that he was fully aware that his life had entered "overtime" and announced his will arrangements. Seven days later, Charlie Munger, Buffett's business partner and lifelong friend, passed away. Recently, Buffett further confirmed the successor candidate in an open letter to shareholders. Buffett made it clear that "in all aspects, Greg Abel is ready to serve as the CEO of Berkshire tomorrow."
46th shareholder letter different from before
On February 24th Beijing time, Berkshire Hathaway released its performance reports for the fourth quarter and full year of 2023. For the entire year of 2023, the company's net profit was 96.223 billion US dollars, with a net loss of 22.819 billion US dollars in the same period last year; Earnings per share was $66412, compared to $-15494 in the same period last year.
With the release of the performance report, the 93 year old Buffett has released his 46th letter to shareholders as usual. Unlike before, this letter reveals some of Buffett's feelings and special arrangements for entering extra time in life.
Firstly, due to the death of his close business partner Charlie Munger (hereinafter referred to as "Munger"), Buffett changed the convention of shareholder letters and did not first present a comparison between the company's performance and the S&P 500 at the beginning. Instead, he commemorated Munger with a whole page of writing.
Buffett believed that without Munger, Berkshire Hathaway could not have been as successful as he is now, and Munger played a significant role in shaping Buffett's investment philosophy. Buffett highly praised Munger, calling him the "architect" of Berkshire Hathaway, while he himself was the "general contractor" who implemented Munger's vision day after day.
"Whenever my old habits are difficult to change, he always brings me back on track in a timely manner. Until his death, he always played this role." "Charlie never tried to take credit for his role as a creator, but let me accept applause and honor. In a sense, Munger is both like a brother and sometimes like a loving father," Buffett said.
Secondly, for the first time, Buffett explicitly mentioned the successor candidate in an open letter.
On November 21, 2023, Buffett announced his will arrangement, stating that his life had entered "overtime". It was rare to mention that the company's successor had also been arranged, stating that Berkshire Hathaway had a "suitable CEO" and a "suitable board of directors" to succeed him, but the specific candidate was not explicitly announced at the time.
In this open letter, Buffett clearly stated, "In all aspects, Greg Abel is ready to take on the role of CEO of Berkshire tomorrow."
Thirdly, Buffett emphasized his commitment to Berkshire Hathaway's "sustainable operation". He stated that the extreme "fiscal conservatism" adopted by the company is a commitment to shareholders. Over the long decades, these prudence may prove to be unnecessary behavior, but this prudence is key to protecting shareholder interests. Berkshire Hathaway's investment rules will never change: "We will never take the risk of permanent loss of capital."
New leader's style: "Be low-key and do things with a high profile"
In this letter to shareholders, Buffett clearly emphasized that the current Vice Chairman of Berkshire Hathaway, Greg Abel, is his successor.
Buffett specifically stated, "In all aspects, Greg Abel is ready to become the CEO of Berkshire tomorrow." "From all aspects, he has the potential to become Berkshire's next CEO."
In addition, Buffett also expressed his feelings towards Greg for falling in love too late. In the final part of his letter, he wrote, "Interestingly, in the 1990s, Greg lived in Omaha, only a few blocks away from me, for six years. Unfortunately, during that time, we never met."
In 2012, Buffett was diagnosed with prostate cancer, and his successor has been a hot topic of public discussion ever since. In 2021, Buffett publicly stated in the media that "the directors unanimously agreed that if something happened to me tonight, it would be Greg Abel taking over tomorrow." However, he also mentioned, "If, hopefully not, anything happened tonight, then it would be Agit." It can be seen that Buffett had already regarded Greg as the first in line successor to run the company at that time.
Greg, born in the 1960s, currently serves as the Vice Chairman of Berkshire Hathaway, primarily responsible for non insurance business. He was born into an ordinary working family in Canada and has a passion for hockey and rugby. The industry claims that he is similar to Buffett and his personal life is extremely low-key. According to Forbes, as of 2021, Greg's net assets were approximately $484 million.
In 1984, Greg officially graduated from the University of Alta and became an accountant at PwC. In 1992, at the age of 30, Greg joined CalEnergy, a small geothermal power generation company, and was promoted to its president in 1998. In 1999, CalEnergy acquired MidAmerican Energy and renamed the company to the latter. In 2000, Berkshire Hathaway acquired MidAmerican Energy, and Greg became Buffett's right-hand man. It is worth noting that this company is the predecessor of today's Berkshire Hathaway Energy.
After becoming a member of Buffett's team, Greg continued to demonstrate his abilities and led multiple mergers and acquisitions, such as PacifiCorp in 2005, NV Energy in Nevada in 2013, and Dominion Energy's pipeline business in 2020.
In addition, Greg also founded a small real estate company called Home Service, which is currently one of the most successful holdings under Berkshire Hathaway.
In 2018, Greg served as the Chairman of Berkshire Hathaway Energy and became the Vice Chairman of Berkshire Hathaway's non insurance business and a member of the company's Board of Directors in the same year. From then on, Greg officially took charge of important sectors such as energy, railways, and retail at Berkshire Hathaway.
Affected by the COVID-19, Berkshire Hathaway's annual net profit in 2020 once halved, but the Berkshire Hathaway Energy Company in the charge of Greg had a revenue of 15.556 billion dollars and a profit of 3.4 billion dollars in 2020. In 2022, the company's revenue exceeded 25 billion US dollars and it has 24000 employees.
Buffett once praised Greg and others as "huge assets" of the company in a 2002 letter to shareholders, and prepared to inject a large amount of funds into the energy company he was responsible for, hoping that they would push their business development to new heights. In his 2014 letter to shareholders, Munger generously praised Greg, describing him as "performing exceptionally well" and describing him as "world-class". However, he still found it insufficient, and should be considered "world leading". "In some important aspects, he is even an outstanding business executive than Buffett."