A Post-Buffett Berkshire Is Omaha Focus After Munger’s Passing

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(Bloomberg) — Berkshire Hathaway's annual meeting on Saturday gave shareholders a glimpse at how the group would function without Charlie Munger, who died last year at age 99. Then came the questions: How would you do without Warren Buffett?

With the billionaire investor turning 94 this year and Munger's death in November, succession at Berkshire has become an increasingly pressing issue for shareholders, even after Buffett named his successor in Greg Appel in 2021. But for anyone speculating, Munger's death may have hastened Buffett's retirement. He had this to say as he wrapped up Saturday's event: “Not only do I hope you come next year, I hope I come next year.”

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Buffett and Munger transformed Berkshire from a failing textile mill into an industry giant spanning insurance, energy and railroads that generated billions in profits — including $11.2 billion in the first quarter — and amassed a massive cash pile that reached a record $189 billion at the end of March. In an economy plagued by high inflation and uncertainty about interest rate cuts, shareholders accustomed to Berkshire's investment success were eager to see how this could continue without Buffett, who has been at the helm for decades.

One person asked what the culture would be like at Berkshire under Appel, while the vice president of the company's non-insurance operations joined Buffett on stage to ask questions. Whether Abel would take over the stock portfolio that Buffett was managing came another question.

“That decision will be made while I'm not around,” Buffett replied, joking that he might try to go after those who do it differently than him. “I'll leave the capital allocation to Greg. He understands the business very well, and if you understand the business, you understand common stock.

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Abel's more than two-decade track record at the group includes making high-profile deals and overseeing its sprawling non-insurance businesses, from BNSF Railway to Dairy Queen. But Buffett's aphorisms and status as the Oracle of Omaha have earned him a reputation as the benevolent face of capitalism, and guaranteed him a following that Appel may find difficult to emulate.

Chris Bloemstran, president of Semper Augustus Investments Group, doesn't seem concerned. Appel is an exceptional leader who will be a “great allocator of capital,” he said before meeting at Gabelli Funds' annual Omaha Value Investor Conference on Friday.

“There is no other Warren Buffett,” he said. “Luckily they have a great painting.”

It was inevitable that Munger would be largely absent from the meeting, as he had taken the stage alongside Buffett for decades, entertaining crowds with his humorous — and sometimes acerbic — quips. On the sidelines of Saturday's event, investors were clear that there would not be another Buffett or Munger. No matter how competent their successors, this duo brought an authenticity and charisma that will be difficult to replace.

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Greetings Munger

On Saturday, Buffett praised Munger's love of learning, his ability to bounce back from failure, and his investing acumen and wisdom. Buffett said he has never seen someone peak at 99.

“He went everywhere with his mind, so he wasn't just interested in the world at 99 years old, the world was interested in him,” Buffett said. At one point, Buffett mistakenly referred to Berkshire Vice Chairman Greg Appel as “Charlie” when asking him a question.

As succession came up again and again, Buffett continued to call for leadership changes at Apple, one of his favorite companies — even though he sold some of its shares in the first quarter. He pointed to the strong leadership of CEO Tim Cook, who took over from Steve Jobs.

Read more: Charles Munger, who built Berkshire with Buffett, dies at 99

Munger died in November, just months before his 100th birthday, prompting an outpouring of tributes to his depth of knowledge, sense of humor and investment acumen. A lawyer by training, Munger helped Buffett, who was seven years his junior, formulate a philosophy for investing in companies for the long term.

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“I think he gave us all permission to tell the honest truth when we can,” John Rogers, co-CEO of Ariel Investments, said at the Gabelli event. “And that's the thing I think I take away from Charlie the most.”

Read more: Master of One-liners: Munger on Politics, Life, and Cryptocurrency

Under her management, Berkshire posted average annual gains of 20% from 1965 through 2022 — nearly double the pace of the Standard & Poor's 500. Decades of compounding returns have made the couple billionaires and folk heroes to adoring investors.

“I think Charlie would be the first to say that if Berkshire is hurt by his departure, they haven't done their job,” said Adam Mead, who wrote “The Complete Financial History of Berkshire Hathaway.”

– With assistance from Catherine Doherty and Paige Smith.

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