Greg Abel’s message to Berkshire shareholders, post-Buffett: be patient

{"text":[[{"start":12.1,"text":"Greg Abel promised Berkshire Hathaway shareholders that he will act “decisively” and make “significant” investments in stocks or acquisitions when opportunities arise."}],[{"start":23.1,"text":"When will that be? Be patient."}],[{"start":26.1,"text":"Leading the conglomerate’s annual gathering in Omaha for the first time, the 63-year-old chief executive, who took over from Warren Buffett earlier this year, said the company’s mammoth $380bn cash and Treasury portfolio meant Berkshire was not “beholden to anyone”."}],[{"start":43.650000000000006,"text":"He added that he was “not anxious to deploy capital into subpar opportunities”."}],[{"start":48.75000000000001,"text":"“Do we have any idea what will occur tomorrow or will that event be three years from now, two years from now?” Abel asked. “But there will be dislocations in markets that again will allow us to act.”"}],[{"start":60.25000000000001,"text":"The famed annual meeting marked a shift from years past, not least because Buffett was seated in the front row alongside the company’s other directors. The meeting itself was shorter, with less time for shareholders’ questions, and the videos that traditionally precede the meeting — featuring cameos from celebrities such as Jamie Lee Curtis — were not aired."}],[{"start":80.35000000000001,"text":"Abel kept his answers focused on the business, frequently invoking Berkshire’s values and culture. He played a video clip of Buffett’s testimony to Congress in 1991 in the wake of the Salomon Brothers bond trading scandal, where Buffett intoned: “Lose money for the firm and I will be understanding. Lose a shred of reputation for the firm and I will be ruthless.”"}],[{"start":102.45000000000002,"text":"Abel said that testimony, which is typically played each year at the company’s annual meeting, was Berkshire’s anthem."}],[{"start":110.45000000000002,"text":"“We’ve heard many times the ABCs, the arrogance, bureaucracy, complacency that can creep into a company will kill a company,” he said. “And we intend to never allow that to happen.”"}],[{"start":null,"text":"

"}],[{"start":122.40000000000002,"text":"But unlike Buffett, he did not provide his broader views of the world or offer the professorial wisdom that shareholders had come to cherish from his predecessor. The crowd in Omaha was smaller than in previous years — particularly in recent meetings when many shareholders flew in worried that it could be the last time they saw Buffett speak in person. Parts of the upper sections of the arena were sparsely filled; Berkshire did not respond to a request for attendance figures."}],[{"start":149.60000000000002,"text":"Abel joked that he knew the company’s board and his family would attend, but he was not sure who else would be in the audience."}],[{"start":156.15000000000003,"text":"“But it’s wonderful to all have you here,” he said, to laughter."}],[{"start":160.20000000000005,"text":"Abel, like Buffett before him, repeatedly said he would be patient and disciplined when investing. Buffett has previously lamented the sky-high valuations on US stocks which limited his options to dive into the market. A flood of private equity capital has also challenged Berkshire’s ability to compete on dealmaking."}],[{"start":null,"text":""}],[{"start":179.60000000000005,"text":"Berkshire has been steadily shedding stocks for more than three years, and it has only drawn on its cash pile to fund a handful of large-scale acquisitions. That has meant that the tens of billions of dollars that flood into its subsidiaries each year are being funnelled into US Treasuries. Its cash level has risen sixfold over the past decade."}],[{"start":199.85000000000005,"text":"Buffett, speaking on Saturday, said that during his 60 years leading Berkshire he had maybe five “juicy” years, nodding to the crises that offered the so-called Oracle of Omaha lucrative investment opportunities. More recently, the company has tended to stay on the sidelines."}],[{"start":216.20000000000005,"text":"The influx of private capital to markets has affected Berkshire’s insurance operations as competition drives down the rates insurers charge. Abel and Berkshire vice-chair Ajit Jain, who oversees the company’s insurance businesses, have said they will underwrite less business as a result."}],[{"start":233.15000000000003,"text":"“Insurance, much like investing, is a game that requires patience,” Jain said on Saturday. “It is very difficult to get people to sit back and do nothing.”"}],[{"start":null,"text":""}],[{"start":243.20000000000005,"text":"He added: “Every now and then you will come across a deal that will hit you with a two-by-four and it will be screaming ‘money’. That’s when you come to me and we’ll make a decision whether to do it or not.”"}],[{"start":254.50000000000006,"text":"Abel gave a full-throated defence of Berkshire’s conglomerate structure as investors questioned whether the company should stay in its current form without Buffett in charge."}],[{"start":263.55000000000007,"text":"He signalled a willingness to sell underperforming businesses and divisions that could cause reputational harm, but as to whether he would break up the business: “Absolutely not.”"}],[{"start":273.6000000000001,"text":"“We are a conglomerate but we are an efficient conglomerate,” he said."}],[{"start":278.7000000000001,"text":"Abel made a concerted effort to signal that he was the right shepherd to lead Berkshire into its next phase after six decades under Buffett, who used the acquisition of insurer National Indemnity to transform a foundering textile manufacturer into a $1tn company."}],[{"start":296.4000000000001,"text":"Badges for the event were emblazoned with the phrase “The Legacy Continues”. Giant pop-art illustrations with Abel’s and Buffett’s faces greeted attendees, in a nod to American artist Shepard Fairey’s Barack Obama “Hope” poster. "}],[{"start":312.6500000000001,"text":"Abel was immortalised by individual subsidiaries as well. See’s Candies turned him and Buffett into cardboard hockey-playing caricatures — a nod to Abel’s love of the sport — and offered boxes of chocolate that they said were Abel’s favourites. "}],[{"start":null,"text":""}],[{"start":327.4500000000001,"text":"The toymaker Jazwares turned him into a stuffed plush toy, just as it had to Buffett’s late business partner, Charlie Munger. The company also offered T-shirts with Buffett and Abel’s faces in a Warholesque screen print."}],[{"start":341.0000000000001,"text":"Buffett acknowledged the challenge for an incoming chief executive whose predecessor is deeply influential. He asked Apple chief executive Tim Cook, who has attended the annual meeting for years, to stand for applause."}],[{"start":354.4500000000001,"text":"“How would you like to step into the shoes of Steve [Jobs] and come through his record?” Buffett asked. “I mean, it’s one of the miracles of American business management.”"}],[{"start":364.7000000000001,"text":"The timing was apt, given the trial Abel is facing as Berkshire’s new chief executive. "}],[{"start":370.9000000000001,"text":"“This is not my show today,” Buffett said. “Greg is doing everything I did and then some. And he’s doing it better in all cases.”"}],[{"start":385.50000000000006,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1777770606_2538.mp3"}