With designated successor from Des Moines at annual meeting, Warren Buffett says Berkshire Hathaway built to last
OMAHA, Neb. — With Des Moines resident Greg Abel attending his first Berkshire Hathaway annual meeting as company CEO Warren Buffett's designated successor, Buffett said Saturday he felt confident that shareholders will be in safe hands under the guidance of the leaders who follow him.
Buffett, 91, has announced no retirement plan. But he told thousands of shareholders at the company’s annual meeting in its headquarters city of Omaha, Nebraska, that the future was as assured as it could be.
He pointed to a company culture he said imbues the executives, employees, directors and shareholders of the $761 billion conglomerate, a perennial top-10 member of the Fortune 500 rankings.
“Berkshire is built to forever. There is no finish point,” said Buffett. “The new management — and the management after them and after them — are just custodians of a culture that's embedded.”
Buffett said the company — owner of businesses as diverse as the BNSF railway, Fruit of the Loom and Geico insurance — exists because "people trust us" to safely invest their savings.
Berkshire Hathaway prides itself on buying and investing in well-managed companies that provide strong, long-term returns, he said. "All we have to do is fulfill that trust," he said, adding that Berkshire's executives have the resources and freedom to do that.
Buffett said if he dies tomorrow, the "railroad will run the same way."
"If we have the same culture, we'll be here in 100 years," he said, answering shareholder questions along with business partner Charlie Munger, 98; Abel, who runs Berkshire's noninsurance businesses; and Ajit Jain, who is over Berkshire Hathaway's insurance businesses and also was considered as a Buffett successor.
More: 7 things to know about Greg Abel, the Iowan in line to lead Berkshire Hathaway
It was the second year Abel and Jain, both Berkshire Hathaway vice chairs, shared the stage with Buffett and Munger. Shareholders tuned in via video links in 2019 and 2020, due to the global pandemic that shut down most large gatherings.
At last year’s meeting, Munger dropped a big hint about the line of succession when he said Abel would "keep the culture" of the vast and decentralized business. A couple of days later, Buffett confirmed Abel would become CEO of the company if anything happened to him.
Asked late Saturday if Abel will have the same freedom as Buffett to spend billions of dollars buying or investing in companies he likes, Buffett said the board may exercise more oversight over the younger man, 59.
Abel might face "some more restrictions or they'll have some more consultation on ... some matters than they do with me," Buffett said. "They won't need to, but they will feel that they haven't had the experience (with Abel) on a whole bunch of things."
Buffett said Abel and other executives are dedicated to Berkshire Hathaway. He made no mention of retiring, repeatedly saying Saturday that he loved the job he works at every day.
In a video interview with former CBS journalist Charlie Rose, posted on Rose’s website April 14, Buffett used a sports metaphor to talk about the next company leader: "We have a successor in place, but he’s not warming up. I’m in overtime, but I’m still out there."
The question-and-answer session, stretching several hours, is a tradition of Berkshire Hathaway annual meetings. Among the issues Buffett, Munger, Abel and others addressed:
Market speculation increasing stock churn, Warren Buffett says
Buffett compared speculation on Wall Street to gambling in a Las Vegas casino, a situation he said created an opportunity for Berkshire Hathaway to acquire a roughly 14% stake in Occidental Petroleum for $1 billion in just two weeks.
Buffett said an investor would have to work for years to get 14% of Berkshire Hathaway's shares, given that investors tend to buy and hold the company's shares.
Other stocks, he said, are experiencing increasing churn. "The money is in turning over stocks," he said, adding that brokers "make a lot more money when people are gambling, rather than when they're investing."
Buffett said Berkshire Hathaway, by contrast, buys companies it thinks will add to the business's value over time. It's similar to buying farmland, an auto dealer or an apartment building, he said.
"If someone buys a farm, they don't sit there and get quotes 15 times a day," he said. "They go about making the farm worth more money."
Munger said the U.S. is experiencing "a mania of speculation."
"We have computers with algorithms trading against other computers," he said. "We’ve got people who know nothing about stock being advised by stockbrokers who know even less," he said. "It’s an incredible, crazy situation."
Cyberattacks are a constant risk
Buffett and Munger did most of the talking, but Abel chimed in a few times during his morning session on stage, in particular on cybersecurity — something that's a particular concern for Des Moines-based Berkshire Hathaway Energy, owner of MidAmerican Energy. Abel joined the company via the utility and oversees Berkshire Hathaway's energy holdings.
"It's a constant risk. It's our greatest risk," Abel said, noting that hackers target Berkshire Hathaway Energy millions of times each day.
Abel said the company spends a lot of "time, energy and resources" working to manage risks and foil attacks, adding that the companies have avoided significant problems as a result.
In a unique partnership, Buffett said businesses are working closely with government officials, sharing information to protect the U.S. from cyberattacks. Russia is a major source of them, and they are expected to increase as the U.S. aids Ukraine in its defense against the Russian invasion.
Businesses typically think that government can't do anything right, Buffett said, and government thinks industry is focused only on its own interests. But the cooperation between government and business against cyberwarfare has been magnificent, he said.
"The cooperation is incredibly strong," Abel concurred.
Warren Buffett's advice on hedging against inflation
Buffett gave a young questioner some unusual advice when asked to suggest one stock that would be a good pick during rising inflation.
Buffett said the New York City teenager should invest in "something you can be exceptionally good at," with the understanding that people will value her talent.
"Be the best doctor or lawyer or whatever it might be," he said, adding that people will pay for that skill with something that has value.
"The best investment is one that develops yourself," he said. "No one can take away the talent that you have."
Munger added that when she sets up her own retirement account and "your advisor tells you to put money into bitcoin, just say no."
The Associated Press contributed to this article.
Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at deller@registermedia.com or 515-284-8457.
This article originally appeared on Des Moines Register: Berkshire built to last, says Buffett, sharing stage with Greg Abel
