Warren Buffett Retires

Warren Buffett and Greg Abel (Tullo/WSJ)

94-year-old Warren Buffett will step down as Chairman of Berkshire Hathaway:

Buffett said Saturday at Berkshire’s annual meeting that he plans to step down as CEO at the end of the year and hand the reins to [Greg] Abel. In his 60 years of delivering stunning investment returns and folksy wisdom, the 94-year-old has been the glue that binds together Berkshire’s collection of businesses—from Dairy Queen and Duracell to railways and insurers—at a time when big conglomerates are out of style.

Abel will inherit the challenge of overseeing that wide-ranging empire, while living up to Buffett’s seemingly impossible-to-replicate record in stock picking—something even Buffett has struggled to do in recent years...

A former accountant from the Canadian Prairies who joined Berkshire through its acquisition of a utility in Des Moines, Iowa, Abel helped build Berkshire Hathaway Energy into one of the company’s biggest businesses through a series of acquisitions and investments.

By 2018, Buffett had seen enough to put Abel in charge of all of Berkshire’s businesses outside of its insurance operations and add him to the board. Abel now oversees dozens of companies, including Benjamin Moore, Fruit of the Loom, Oriental Trading and See’s Candies. Buffett still runs the bulk of the company’s investment portfolio and makes decisions on how to deploy capital.

We can dust off all the cliches--Greg Abel has big shoes to fill, Why There Will Never Be Another Warren Buffett--but one prediction is undoubtedly true: Greg Abel's strengths lie in operating Berkshire's many businesses; he will need assistance in making investment decisions.

Two lieutenants, Todd Combs and Ted Weschler, each manage a portion of Berkshire’s stock portfolio, and some Berkshire watchers expect them to take on a bigger investing role when Abel becomes CEO.

“I don’t see anything in [Abel’s] background that would make him a good stock picker. That’s not where he got his chops,” said Robert Miles, who teaches a class on Buffett at the University of Nebraska Omaha. “My guess is Greg will be in charge of major acquisitions and capital allocation, but the investment managers already in place will continue” to oversee the equity portfolio.

Bill Miller, the veteran stock picker, advised Abel to follow the advice Buffett has long dispensed to individual investors: “Put most of the excess cash in an S&P 500 index fund,” he wrote. “Then let Todd and Ted actively manage the residual.”