Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) CEO Warren Buffett is widely considered to be the most successful investor of all time. Berkshire investors know that, at age 87, Buffett isn’t getting any younger, but this week he took steps toward securing the future of Berkshire after his passing.
Investors have been speculating for years about who would succeed Buffett and his 94-year-old right-hand man Charlie Munger at Berkshire Hathaway. On Wednesday, the company announced two new senior executives have been promoted from within Berkshire. Gregory Abel, 55, will take over as vice chairman of Berkshire’s non-insurance business. Ajit Jain, 66, will take over as vice chairman of Berkshire’s insurance operations.
[See: Buy and Hold: Be an Investing Expert Like Warren Buffett.]
Buffett and Munger will remain in their current positions as CEO and vice chairman, respectively. Abel is now seen as the frontrunner to ultimately succeed Buffett as CEO. Abel meets all the criteria Buffett has said he would look for in a replacement, including a long tenure at Berkshire and a track record of long-term thinking and success. Abel started at Berkshire Hathaway Energy in 1992 and has served as president, director, CEO and chairman of the board of the subsidiary.
“The most likely successor in our view, who Warren Buffett regularly praises, is Greg Abel,” J.P. Morgan analyst Sarah DeWitt said in September, according to CNBC. “We think Greg Abel would be a strong allocator of capital and the earning power of the underlying business would remain strong after Buffett.”
With a figurehead as well-known and respected as Buffett at the helm, Berkshire investors are rightfully concerned about the headline risk to the stock from Buffett passing or stepping down. However, Buffett’s age is no secret, and Salvini Financial Planning analyst Brooke Salvini says Buffett’s passing could actually serve as a long-term buying opportunity for investors.
[See: The 9 Best Investors of All Time.]
“He has done a fabulous job educating and involving his shareholders in his vision and philosophy,” Salvini says. “If some less-knowledgeable shareholders are spooked by his death, there will be plenty of others [who] will gratefully purchase additional shares on a price dip.”
For investors who still want to follow Buffett’s investing strategy even after he leaves Berkshire, he told investors in his 2014 annual letter that he has instructed the trust he is leaving to his wife to be 90 percent invested in Standard & Poor’s 500 index funds and 10 percent invested in U.S. Treasury bonds.
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Berkshire Hathaway Inc. (BRK.B) Is Prepared For Buffett’s Departure originally appeared on usnews.com
