Warren Buffett has been the face and a representative of Berkshire Hathaway for many years, making it transition from a textile business to one of the biggest conglomerates in the world. With Buffett now in his late eighties, the subject of who will take over has emerged as an almost daily topic of conversation among investors, analysts, and business people. The transition of Buffett from the management of Berkshire Hathaway would mark a shift and people would make speculations and guesses as to how Berkshire might transform under an unprecedented leadership.
Why Buffett’s Leadership Matters
Buffett’s leadership style is quite unconventional in many ways. Also known as the “Oracle of Omaha,” he has successfully grown Berkshire Hathaway through the principles of value investment, which involves identifying good companies with sound management and taking long-term positions in them. Under Buffett’s guidance, Berkshire has expanded into an umbrella of diversified businesses ranging from insurance (Geico), rail transportation (BNSF Railway), utilities and energy (Berkshire Hathaway Energy), and consumer goods (Dairy Queen, Duracell).
Three of the factors that have enabled Buffett to deliver excellent results include his ability to identify undervalued assets, his disciplined approach to investing, and his non-interventionist management style. As of now, Berkshire has a market capitalization of over $700 billion and a Class A share price is more than $500,000; this shows that the company’s worth is as good as the confidence investors have in Buffett.
As Buffett himself has said, he will not be there to run it forever. This raises the critical question: who will succeed him when he is out of office and what direction will he set for Berkshire Hathaway in the future?
The Leading Successor Candidates
Although Buffett has not publicized the information regarding his successor much he has ensured that the public knows that Berkshire has a strong succession plan. Many people have suggested potential successors to Buffett each with different qualities that can help lead Berkshire in the future.
1. Greg Abel
Greg Abel, the Vice Chairman of Berkshire Hathaway’s non-insurance businesses and head of Berkshire Hathaway Energy, is presumed to be the most likely successor to Buffett. Abel has been with Berkshire since 2000 and has worked his way up through the ranks because he has proven himself to be a leader with the vision to expand the firm’s energy sector.
One of the most notable areas of Abel’s focus has been renewable energy, which complements Buffett’s long-term strategy of preparing Berkshire for new economy businesses. Under Abel’s leadership, Berkshire Hathaway Energy has grown to be among the biggest utility companies in the United States with major investments in wind, solar, and hydroelectric power.
Abel also has considerable operational experience in a variety of industries, which is consistent with Buffett’s low-profile approach to management. Shareholders appear to believe he can continue to keep Berkshire’s system of relatively free-standing subsidiaries intact.
2. Ajit Jain
Ajit Jain, another potential successor, who is the Vice Chairman of Berkshire Hathaway’s reinsurance operations. He joined the company in 1986 and he is acknowledged for growing Berkshire’s reinsurance operation into a global industry giant that produces billions of dollars in revenues every year.
Jain’s knowledge of the insurance industry is vast, which makes him a suitable candidate for the CEO position at Berkshire. His experience in risk management and underwriting discipline has been crucial in ensuring that Berkshire does not succumb to financial crises such as the one experienced in the financial year ending in 2008. However, while Jain has a strong background in the insurance business, there are concerns that he lacks the overall operational experience to lead the entire conglomerate.
3. Brian Dolber and Mr. Harrigan
Two of Buffett’s star investment managers are Todd Combs and Ted Weschler and they are both seen as possible successors, especially in the management of Berkshire’s giant investment fund. Both have been given the responsibility of managing large parts of Berkshire’s capital, and both have delivered excellent results for Buffett.
While Combs and Weschler have done enough to gain the trust of Buffett, their background is more inclined towards investment and not managing a mammoth operation like Berkshire Hathaway. They are most probably going to maintain their position of being in charge of the investment decisions of the company rather than being the CEO.
Conclusion
The subject of who will be the next chief to take over from Warren Buffett at Berkshire Hathaway is one of the most discussed topics in the financial world today. Greg Abel and Ajit Jain are still the favorites, each with his advantages and plans for the further development of the company. Of course, no one will be able to replace Buffett in terms of leadership, but the structure and power of Berkshire Hathaway indicate that the company will continue to reign in the market even after Buffett retires.
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