Warren Buffett on Monday assured Berkshire Hathaway shareholders they need not worry about his upcoming departure as chief executive, giving a full-throated endorsement to his successor Greg Abel and promising to remain a major shareholder.
In a letter to Berkshire shareholders, possibly his last public communication with them until he steps down at year-end, Buffett, 95, downplayed Berkshire’s recently underperforming stock.
He also said Abel has “more than met” his high expectations when he first thought the 63-year-old was CEO material.
“I can’t think of a CEO, a management consultant, an academic, a member of government—you name it—that I would select over Greg to handle your savings and mine,” Buffett wrote. “He is a great manager, a tireless worker and an honest communicator. Wish him an extended tenure.”
Buffett has led Berkshire since 1965, and will remain chairman of the $1.07 trillion conglomerate.
He also announced plans to speed up his charitable donations to family foundations led by his daughter Susie, 72, and sons Howard, 70, and Peter, 67, but assured that this “in no way reflects any change in my views about Berkshire’s prospects.”
Referring to longtime second-in-command Charlie Munger, who died in 2023, Buffett said he wants to keep a significant number of Class A shares “until Berkshire shareholders develop the comfort with Greg that Charlie and I long enjoyed.”
“That level of confidence shouldn’t take long,” Buffett added. “My children are already 100% behind Greg as are the Berkshire directors.”
Buffett donated more than $1.3 billion of Berkshire stock, the equivalent of 1,800 Class A shares, on Monday to four family foundations led by his children.
He has donated more than half his Berkshire shares since 2006, mainly to the Gates Foundation, but still owns close to 14% of the Omaha, Nebraska-based conglomerate’s stock. Buffett is worth about $149 billion, according to Forbes magazine.
BUFFETT CONFIDENT IN BERKSHIRE EVEN AS PREMIUM ERODES
Berkshire’s share price has fallen 8% since early May, when Buffett unexpectedly announced he would step down, while the Standard & Poor’s 500 .SPX has risen 20%.
Investors believe that this eroded much of the “Buffett premium” embedded in Berkshire’s stock because of the presence of arguably the world’s most revered investor.
In his letter, Buffett said Berkshire’s stock price will move “capriciously,” noting that it has fallen about 50% three times since he took over.
“Don’t despair: America will come back and so will Berkshire shares,” Buffett said.
Even so, Buffett said Berkshire’s nearly 200 businesses collectively have “moderately better-than-average prospects,” and investors should not expect Berkshire to trounce the market as it did when it was small.
“Our size takes its toll,” Buffett said. “Because of Berkshire’s size and because of market levels, ideas are few – but not zero.”
Abel has been a Berkshire vice chairman overseeing non-insurance operations since 2018, and was publicly designated Buffett’s expected successor in 2021.
He has drawn wide praise from Berkshire business leaders for his management skills, and taken on more of Buffett’s work, which includes allocating capital. Buffett said Abel understands many Berkshire businesses “far better than I do.”
CHILDREN TO OVERSEE BUFFETT’S REMAINING FORTUNE
After Buffett dies, his children will oversee a charitable trust that will contain nearly all of his remaining wealth, and have about a decade to give it away.
Successor trustees have been named if they cannot serve. Donations to the Gates Foundation will stop.
Berkshire-owned businesses include Geico car insurance, the BNSF railroad, an array of energy and industrial businesses, and familiar retail brands such as Dairy Queen, Fruit of the Loom and See’s Candies.
The conglomerate also ended September with $283.2 billion of stocks including Apple and American Express, and $381.7 billion of cash.
While Buffett will no longer write Berkshire’s annual shareholder letters or lead its annual meetings, he plans to continue communicating with shareholders around the Thanksgiving Day holiday.
“To my surprise, I generally feel good,” Buffett said. “Though I move slowly and read with increasing difficulty, I am at the office five days a week where I work with wonderful people.”