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Berkshire Hathaway’s stock has fallen 14% since Warren Buffett’s surprise retirement announcement on May 3 last year, while the S&P 500 has risen 26%, according to David Kass, a finance professor at the University of Maryland and a longtime Berkshire blogger. Kass said he would like to hear Greg Abel’s explanation for Berkshire’s underperformance versus the S&P 500 by roughly 40 percentage points over the past 12 months.
Berkshire ended December with a record $373 billion in cash, Treasury bills, and other liquid assets. The figure exceeds the market value of Chevron ($371 billion), Palantir ($365 billion), and Cisco ($355 billion).
Kass and other analysts pointed to the challenge Buffett faced in deploying that cash as stock valuations surged, acquisition prices increased, and even buybacks became less attractive as Berkshire shares climbed. With Buffett stepping aside, the focus has shifted to whether Abel will put the cash to work.
“What are his plans to invest $373 billion in cash?” Kass asked.
Brett Gardner, an analyst and author of “Buffett’s Early Investments,” raised the possibility that Berkshire could use its liquid assets to buy Buffett’s roughly 14% stake, which he estimated at $138 billion. Gardner also asked whether Berkshire plans to purchase Buffett’s stake in a negotiated transaction at some point.
Since taking over, Abel has made changes to Berkshire’s top leadership, including appointing NetJets CEO Adam Johnson as president. Johnson and Katie Farmer, the CEO of Berkshire-owned BNSF Railway, are expected to join Abel onstage for the second Q&A session.
Larry Cunningham, author of several books about Berkshire and director of the University of Delaware’s Weinberg Center, said he is looking forward to Abel engaging with the two subsidiary CEOs, calling it “a new practice that I hope will add tremendous value to the meeting.”
Gardner also said he is seeking signals on whether Abel intends to appoint additional divisional leaders such as Johnson. Under Buffett, subsidiary CEOs reported to Abel through the head of the non-insurance businesses, while Berkshire’s insurance chief was Ajit Jain.
Chris Ballard, a managing director at Check Capital Management, said he is curious about Ted Weschler’s expanded role at Berkshire. Ballard said he was hoping Abel would share details on how often Abel meets with Weschler, how frequently they are in contact, and what behind-the-scenes responsibilities Greg leans on Weschler for, following the departure of investment managers Todd Combs.
In Abel’s first shareholder letter, he listed Berkshire’s core stock holdings as Apple, American Express, Coca-Cola, and Moody’s, leaving out two large positions: Bank of America and Chevron.
Ballard said he was “very interested” to hear Abel’s views on Berkshire’s stocks and what types of businesses he might add to the core portfolio. He also noted that little is known about Abel’s investing experience.
Paul Lountzis, a longtime Berkshire shareholder and president of Lountzis Asset Management, said he is curious whether Abel would consider offloading any subsidiaries. He referenced Buffett’s approach of offering businesses a permanent home, which distinguished Berkshire from other buyers.
Lountzis asked: “Does he see Berkshire selling any businesses if they receive offers to buy some of the companies at attractive prices?”
Buffett and his late partner Charlie Munger built Berkshire as a decentralized network of autonomous subsidiaries, allowing them to focus on allocating capital rather than running operating businesses. Abel is described as more hands-on and may demand more from Berkshire’s businesses.
Abel wrote in his letter that Pilot ranked second in a study of travel centers’ popularity and that he would not be satisfied until it takes the No. 1 spot. He also noted that Berkshire first invested in Pilot in 2017 but was “contractually delayed” from managing it until 2023, adding that “that mistake will not happen again.”
Ballard said Abel’s comments were “uncompromising” and could be interpreted as unwelcoming. He contrasted this with Buffett’s emphasis on Berkshire as a great home for long-held family businesses, where owners had autonomy.
Ballard asked whether Abel would promise a permanent home to potential sellers and whether he would allow the same level of autonomy as Buffett and Munger—or instead seek to optimize businesses after acquisition.
While Buffett is widely known for his investing record, philanthropy, frugal lifestyle, and diet, little is known about Abel. Kass asked what Abel’s typical day looks like, including how much time he spends traveling to Berkshire’s companies and how many hours per day he spends on investment research, such as reading 10-Ks.
Ballard said he is eager to learn more about Abel “as a person,” both personally and professionally. He suggested Abel could discuss his love of ice hockey, formative life experiences, philanthropy, and friendships in the business world.
Ballard added that it would be helpful to hear stories about interactions with other professionals Abel admires beyond Buffett, as well as what books and movies he likes.
Berkshire has already undergone its biggest shake-up in decades, and further changes may follow. Gardner said he wants to know who will succeed Ajit Jain, who turns 75 this summer, as insurance chief. Lountzis asked how Abel is working with his lieutenants to line up successors when Jain and other executives step down.
With Buffett having headlined Berkshire’s major events for decades, shareholders are expected to learn what it is like when he is no longer running the show.
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