Analysts Reveal Their Pick for Warren Buffett’s Replacement

BusinessAnalysts Reveal Their Pick for Warren Buffett’s Replacement

Analysts Reveal Their Pick for Warren Buffett’s Replacement

Who will step into the shoes of Warren Buffet when he retires as CEO of Berkshire Hathaway Inc.? They are big shoes to fill, and the company isn’t letting out any hints about the billionaire’s successor.
However, that hasn’t stop industry analysts from taking guesses over who it will be.

Likely Successor

The most recent guess comes from an initiation report from JPMorgan. According to those analysts, Greg Abel is most likely to take over for Buffet.
“The most likely successor in our view, who Warren Buffett regularly praises, is Greg Abel,” JPMorgan’s Sarah DeWitt said in a note initiating coverage of the company. “We think Greg Abel would be a strong allocator of capital and the earning power of the underlying businesses would remain strong.”
Abel is the current head of Berkshire’s utility businesses and has long been mentioned by investors and analysts as a leading contender to replace Buffett. Abel has been praised by Berkshire Vice Chairman Charles Munger as a “world-leading executive” who could possibly be better in some areas than Buffett. Abel is just 55, meaning he has a potentially long career ahead of him, and he has received frequent praise from Buffett.
Whether or not Abel will actually be made CEO is unknown, but one thing is for sure: whoever is chosen is already working for the company. In Berkshire’s 2014 letter, Buffet wrote that “future CEOs should come from internal candidates whom the Berkshire board has grown to know well.” Buffett also mentioned that the next CEO should run the company for at least 10 years.
Behind Abel, the next likely successor according to JPMorgan is Ajit Jain, head of Berkshire Hathaway Reinsurance. Jain has also received high praise from Munger and Buffett, but at age 66, he might be too close to retirement himself to be in serious consideration.

Buffett’s Legacy

Speculation has surrounded Buffett’s retirement for years, but that doesn’t necessarily mean it will happen any time soon. The famous businessman turned 87 in August but has shown no signs of slowing down. According to JPMorgan, he could be in his CEO role for another decade. Age seems to be just a number at the company, as Munger, Buffett’s partner, is also very active at age 93.
Buffett’s illustrious career has served as an example for business leaders across all industries and led to his nickname the “Oracle of Omaha”. He has been Berkshire Hathaway’s CEO for 52 years and according to JPMorgan, his “ability to identify attractive acquisition candidates as well as deploy huge sums of money quickly and decisively is unmatched.” Berkshire is the sixth-largest company in the S&P 500 by market cap, but it often gets overlooked by analysts due to the company’s low relative trading volumes.
“Berkshire is a collection of best-in-class businesses that range from insurance to railroads, utilities and manufacturing. The businesses benefit from best-in-class managements, unmatched balance sheet strength, and many of the companies have strong brands, scale or low-cost competitive advantages,” DeWitt wrote in her note.
If it is Abel or not, whoever takes over the CEO position at Berkshire Hathaway will take the helm of an established company that is expected to take a temporary dive when Buffett retires. However, things are expected to quickly rebound, giving the new CEO a chance to put his or her own mark on the company.