The wizard of Omaha, philanthropist and a classic
representation of the word ‘investor’ does not need much introduction. Warren
Buffet who is the Chief Executive Officer of Berkshire Hathaway has numerous
accomplishments under his portfolio. According to Bloomberg reports Mr. Buffet
is worth more than 87 Billion US dollars. Warren Buffet currently owns around
37% of the company shares. He pledged that 99% of his wealth will go charity
once he expires. He has been a visionary in seizing businesses which are
undervalued and turning them into gold mines. Though criticized for his lack of
initiatives towards investing in tech firms, his vast knowledge in other fields
such as railways, insurance to name a few, and continuous perseverance made him
the man he is today. Partnerships were his initial way of raising funds. He
used the money to buy undervalued stocks and later sold them at a premium. Similarly,
he bought the stock of Berkshire Hathaway a textile industry at that time. He
gradually regained control of the company and made it a conglomerate which has
investments in diverse businesses.
The primary objective of Berkshire Hathaway is to
invest in companies which paid good dividends, such as Coca-Cola, IBM, and
American Express. The company is registered on the NYSE; it trades in both
class A and Class B shares. The class A stocks increased almost 4410% (Current
value is 320,238 USD) since its listing. On a contradictory note to their
investment strategies, Berkshire Hathaway does not pay dividends to their
shareholders. The class ‘A’ share value is too high for any investor to buy.
Berkshire Hathaway says that a high share value displays the confidence the company
has in it.
The Board of Directors at Hathaway is ageing and in
dire need of new leaders who can replace the existing ones. The wizard of Omaha
is 87 years old. The vice chairman of Berkshire Hathaway, Charlie Munger is
also 92 years old. Mr. Buffet cannot run the company endlessly and the board of
directors of Berkshire has retirement plans in order as well. Berkshire Hathaway
has always considered of planning a successor after Warren Buffet but as long
as Mr. Buffet stays healthy and is willing to work, he is the boss.
The thought of Buffet not being the CEO of Berkshire
Hathaway is disheartening. The charming man has his own way of doing business
and that too successful business. Investors put their money in some stocks just
because Buffet said that the industry has a better growth in the future. Mr.
Buffet is a Public figure and his powerful influence is spread all over the
Buffet made his intentions clear regarding
selecting his successor. Mr. Buffet is a huge admirer of the values such as
integrity, smart and passionate. He wants someone who has the core values of
the Berkshire Hathaway imbibed in him and whose personal goals lie according to
the vision of the company. This clearly shows that the next CEO of Berkshire
will be someone who spent his majority of time creating and adding value to the
organization. In the 2015 annual letter of Berkshire Hathaway, Mr. Buffet
mentioned that they now have the exact person to succeed him as CEO. Some of
the choices that they have are Ajit Jain, Vice Chairman of Insurance Operations
and Greg Abel, CEO of Berkshire Hathaway Energy and vice chairman of
non-insurance operations of Berkshire Hathaway. The two emerging leaders have
been promoted recently as executives to the company board and are in prime
position to land as the next CEO of Berkshire Hathaway.A deep dive into the profiles tells us how they
function and what they can bring to the table once they succeed the oracle of
Ajit Jain who is aged 65 and is of Indian descent
heads Berkshire Hathaway’s Insurance business. People define him as a risk
taker and a box of innovative ideas. He is the prime protagonist in devising
some of the insurance policies which generated tons of income with premiums on
the insurance. Buffet wrote in one of the annual letters that “Ajit Jain
has created Billions of value for his Berkshire Shareholders and if there were
ever to be another Ajit and you could swap me for him, don’t hesitate. Make the
On the contrary, Gregory Abel aged 55 who hail from
Canada, looks after the energy business. As with the most of the employees of
Berkshire Hathaway, he also avoids the limelight of media and social presence.
He shares the quality of integrity as is with Buffet. Buffet told to an alum
magazine that “Abel brings in innovative ideas and is always creative in
his business approach”.
Charlie Munger the Vice-chairman also speaks highly
of these two people. He says that in taking some business decisions each is a
better business executive than Buffet.
This shows that both are competent enough to be the
successor of the Oracle of Omaha. But industry stalwarts suggest that Berkshire
Hathaway can go for someone who is younger, in this case, evidently Gregory
Analyzing the after-effects of Buffet stepping down
is a difficult one. Company shareholders might lose confidence in Berkshire
Hathaway and sell the shares of the company in the short run, once buffet steps
down. The chosen one must show his appetite for creating lucrative businesses and
attractive propositions so that he gains the confidence of the shareholders.
However, Buffet assures his shareholders that he is
healthy and enjoys going to the office every morning and there is no other
place in the world he would rather be, than in his office.