Investors will be watching closely to see what changes Abel might make in Berkshire’s trajectory, but don’t expect any seismic shifts.
CFRA Research analyst Cathy Seifert said it is natural for Abel to make some changes in the way Berkshire is run. Taking a more traditional approach to leadership with nearly 400,000 employees spread across dozens of subsidiaries makes a lot of sense, she said.
Part of Buffett’s sales pitch to company founders and CEOs thinking of selling their companies has always been that Berkshire would largely allow them to continue running their companies the same way as long as they delivered results.
“I think the investment community would likely applaud Greg’s management style to the degree that it sort of buttons things up,” Seifert said. “And if it helps performance, that can’t really be faulted.”
Abel will eventually face more pressure to start paying a dividend. From the beginning, Berkshire has held the position that it is better to reinvest profits rather than making quarterly or annual payouts to shareholders.
But if Abel can’t find a productive use of the $382 billion cash that Berkshire is sitting on, there may be a push from investors to start paying dividends or to adopt a traditional stock buyback program that would boost the value of shares they hold. Currently, Berkshire only repurchases shares when Buffett thinks they are a bargain, and he hasn’t done that since early 2024.
Still, Abel will be insulated from such pressure for some time since Buffett controls nearly 30% of the voting power in the stock. That will diminish gradually after his death as his children distribute his shares to charity as agreed.
Many of Berkshire’s subsidiaries tend to follow the economy and profit handsomely whenever the country is prosperous. Berkshire’s utilities typically generate a reliable profit, and its insurance companies like Geico and General Reinsurance supply more than $175 billion worth of premiums that can be invested until claims come due.
Investor Chris Ballard, who is managing director at Check Capital, said most of Berkshire’s businesses “can almost take care of themselves.” He sees a bright future for Berkshire under Abel.
One of the biggest questions right now may be how much additional change there will be in company leadership after Combs’ departure, if any at all. The head of the insurance unit, Vice Chairman Ajit Jain, who Buffett has long lavished with praise, is now 74 and many of the CEOs of the various companies have continued working long after retirement age because they like working for Buffett.
“As a long-term shareholder, we aren’t too concerned with Todd’s departure and don’t think this is the tip of some sort of iceberg,” said Ballard, whose firm counts Berkshire as its largest holding. “Todd’s situation is unique. It’s just a reminder that Warren’s pending departure is imminent and they’re preparing for a new phase — one that we’re still excited to see unfold.”
