In his first solo appearance before shareholders, Berkshire Hathaway's new chief executive made the case Saturday that the company can thrive without Warren Buffett at the helm even as it keeps his approach intact. Greg Abel told investors in Omaha that Berkshire's culture "wouldn't change," though he described shifts already under way, including promoting his own lieutenants and expanding the conglomerate's presence in Japan. He said Berkshire, holding a record cash and Treasury pile of about $381 billion, has a list of companies it might buy outright or in part when market disruptions create attractive prices, the Wall Street Journal reports.
He did it with the retired chairman watching; the arena crowd applauded as Buffett, 95, took his seat in the front row of the directors section before Abel spoke. It was the first time in six decades that Buffett was offstage for the annual meeting, per CNBC. From his seat, he told attendees, "Greg is doing everything I did and then some, and he's doing it better in all cases." Abel and other executives addressed:
- Artificial intelligence: Managers are thinking critically about how to use AI to add value, he said, but won't "do AI for the sake of AI." Ajit Jain, vice chairman of insurance operations, told the crowd that while the technology could bring big changes, its ability to tackle complex tasks such as selecting stocks is "still years away."
- Strait of Hormuz: Asked about whether Berkshire's insurance business would offer coverage to ships traveling the strait that's now controlled by Iran, Jain said, "Depends o the price." He said the company is involved in a small way in a program to insure such ships.
- Guiding principles: Abel reiterated core investment and operational principles advocated by his predecessor, including avoiding arrogance, bureaucracy, and complacency. More concrete priorities include holding cash held in US Treasurys, financial independence, and staying flexible on capital allocation and efficient on taxation, he said. "We are a unique conglomerate in that we can move our capital very efficiently," Abel told the crowd. "We can move it from insurance to non-insurance, into equities, or if we so choose, to hold it in cash."
- Bottom line: Berkshire reported first-quarter net income of $10.11 billion, more than double a year earlier, helped by smaller investment losses, while operating earnings rose 18% to $11.35 billion. The company was a net seller of stocks for the 14th straight quarter but resumed share buybacks, per the Journal. Class A shares are down about 12% from their record before Buffett announced his retirement and have lagged the S&P 500 since.
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