CEO Greg Abel moves to assure Berkshire shareholders in a post-Buffett world, with record cash

(Adds details and comments from annual meeting)

* Greg Abel faces challenge to win investors’ trust

* Berkshire’s operating profit increased by 18%, cash reached $380.2 billion

* Attendance dropped after Warren Buffett stepped down as CEO

Written by: Jonathan Stempel, Suzanne McGee and Tatiana Bautzer

OMAHA, Nebraska/NEW YORK, May 2 (Reuters) – Greg Abel has moved to reassure Berkshire Hathaway shareholders that he will invest wisely and manage the conglomerate’s huge cash holdings without the burden of red tape; At the same time, he is trying to win over those who cautiously hope he will be a worthy successor to Warren Buffett. Abel, 63, spoke at Berkshire’s annual meeting in Omaha, Nebraska, four months after taking his place as CEO of arguably the world’s most famous investor.

Rather than its collection of insurance companies, retailers and wealthy businesses in energy, industrial and manufacturing, Berkshire now needs to win the trust of investors enamored with technology and artificial intelligence. “As a conglomerate, we live with the fact that we hate bureaucracy,” Abel said in response to a pre-recorded question from Buffett, who was also sitting in the front row. “We have no intention of being dependent on anyone. We’re starting with this.”

Abel also assured shareholders that he would not split Berkshire, saying the company was operating effectively and its expertise was strong. “We want Berkshire to hold on,” he said. Abel also said Berkshire is constantly evaluating opportunities to add to its existing portfolio, whether through acquisitions of public or private companies or becoming part of a company.

Attendance has dropped significantly since Buffett and Vice Chairman Charlie Munger, who dies in 2023, presided over meetings filled with their lively insights and banter about Berkshire, the economy, markets and life.

Buffett and Munger drew large crowds at the downtown arena where the meeting took place, but when Abel took the stage, several thousand of the nearly 18,000 seats were empty.

He honored the lives and careers of his predecessors by symbolically retiring the jerseys bearing their names, which will hang from the rafters of the arena.

BUFFET SAYS ABEL IS DOING MORE THAN HIM

Buffett, for his part, echoed comments he made when he announced his retirement as CEO last year, assuring viewers that “Greg does everything I do and then some.”

The 95-year-old actor also praised Apple, one of Berkshire’s most successful investments, and its departing CEO Tim Cook. Buffett remains Berkshire’s chairman.

In an interview with CNBC on the sidelines of the meeting, Buffett stated that he is concerned about the gambling mentality that has taken hold of some investors.

“We’ve never seen so many people in a gambling mood until now,” he said. “That doesn’t mean investing sucks, but it does mean that the prices of a lot of things will look utterly ridiculous.”

Although Berkshire is often viewed as a small sample of the U.S. economy, its shares have lagged 39 percentage points behind Standard & Poor’s 500 since Buffett announced he would step down at last year’s meeting.

Short-term thinking is a problem for a $1.02 trillion buy-and-hold giant like Berkshire, but Abel said Berkshire has a “unique opportunity” to improve its business and redeploy capital.

“We can create long-term value for shareholders,” he said.

OPERATING PROFIT INCREASED DESPITE THE CONSUMER CONDITION Before the meeting, Berkshire said its first-quarter operating profit was $11.35 billion, up 18% from the previous year, when insurers were damaged by wildfires in Southern California.

Many retail businesses have struggled with uncertain economic conditions and low consumer confidence. Some larger operations, including BNSF railroad, had higher profits.

Berkshire’s lagging stock price partly reflects Abel and Buffett’s decision not to hastily distribute its record cash, which reached $380.2 billion at the end of March. Berkshire saw some value in its own shares, buying back $234 million in the first quarter, its first buyback since May 2024.

“Greg faces the formidable task of succeeding the greatest investor who ever lived,” said money manager Paul Lountzis, who attended the 34th Berkshire annual meeting.

Adhering to Buffett’s motto of patience, Abel said he wants to hold investments “forever” and will not invest without understanding the economic prospects and risks.

“This doesn’t mean you have to invest all your capital and spend all your money,” he said.

He agreed with Berkshire’s longtime insurance chief Ajit Jain, who also answered questions on stage, that it’s important to say “no” if an investment doesn’t seem right.

“It’s very hard to sit there and do nothing while everyone else is being wined and dined and whisked away to London by brokers,” Jain said.

Abel praised the Oregon appeals court’s recent ruling that, for now, relieves Berkshire’s PacifiCorp unit from billions of dollars in potential liability for the 2020 wildfires. From a legal standpoint, he said, “we’re back to square one,” meaning the threat has diminished.

While Abel said businesses operating in Berkshire have “a lot to figure out” when it comes to collecting refunds, Katie Farmer, general manager of Berkshire’s BNSF railroad, said customers still face uncertainty even after “adapting and adjusting” to increased tariffs.

The meeting is the centerpiece of a weekend of shareholder events around Omaha, including investment conferences, special gatherings and shopping from Berkshire-owned businesses in an exhibit hall adjacent to the arena.

Fewer people shopped. Queues were considerably shorter than in previous years, with thousands of people lining up outside the arena before the doors opened at 7am.

Singaporean finance student Jobby Chin, who attended his first meeting, said he queued up at 2 a.m. and said, “I wanted to enjoy the atmosphere and network with finance professionals.”

Michael DiDonna, a fashion photographer from Oyster Bay, New York, said he arrived at 3:10 a.m. for his fifth meeting. “I want to feel like I’m a part of huge change in the company,” he said.

(Reporting by Jonathan Stempel in Omaha, Nebraska; Additional reporting by Suzanne McGee and Tatiana Bautzer, Editing by Megan Davies, Colin Barr, Edmund Klamann, Rod Nickel)