Greg Abel’s first annual meeting as chief executive of Berkshire Hathaway left many investors with unanswered questions about what he intends to do with a massive war chest left to him by predecessor Warren Buffett.
The few shareholders who managed to ask Abel a question directly at the meeting in Omaha on Saturday wanted to know one thing: how is the 63-year-old Canadian going to put its $380bn in cash and Treasuries to work?
Berkshire, for now, continues to cut down its stock portfolio. It disclosed this weekend that it sold a net $8.1bn worth of stock in Abel’s first quarter as chief executive. It was the 14th consecutive quarter the group trimmed its equity positions.
The questions reflect anxiety about high market valuations, with the S&P 500 trading at a record high despite the Iran war pushing oil prices sharply higher and threatening supply chains that are key to the global economy.
But very little of the half-day affair was spent on the $288bn stock portfolio, and on how Abel was evaluating equities.
Abel signaled that he, like Buffett, was unenthusiastic about diving into the market at current valuations. “It’s not that we don’t see exceptional companies out there today,” he said. “But . . . we’re not interested in acquiring those companies at that price.”
Still, investors say they noticed subtle shifts in Abel’s approach compared to Buffett.
Darren Pollock, portfolio manager at Cheviot Value Management, said Abel did not seem shy “about maybe getting rid of a business here or there… but these aren’t gargantuan changes.”
“Berkshire is a giant tanker and it’s only moving a degree or two difference in each direction, if it does move at all.”
Some investors sought to draw Abel out on how much time he was spending managing the stock portfolio and how he was looking for new minority investments.
Abel said that most of Berkshire’s share portfolio was concentrated in a small number of large stocks, meaning “the active management of that is really limited.”
“We don’t have to discuss them every day but if there’s something going on across those businesses we’d be discussing it that week or that month,” he said of the portfolio.
He said the group was “constantly evaluating what other opportunities are out there” and that market dislocations would eventually materialize and present other possibilities.
But shareholders gained few new insights on Saturday into how Abel was evaluating minority investments in the market.
“It’s a shocking amount of money to try to deploy,” Pollock said.
But Pollock added that Abel seemed to share Buffett’s investing “DNA.”
“They’ll keep looking, eventually the macro environment will get a little turbulent, it will produce some opportunities, and they’ll be there to take advantage of them.”
Abel is walking a tightrope after taking over from a man largely considered to be the greatest investor of all time, with Berkshire outpacing the S&P 500 by more than 6 million percentage points under Buffett’s direction.
The former accountant reassured some by demonstrating an understanding of the hundreds of subsidiaries that Berkshire owns, diving into the operating margins of railway company BNSF and auto insurer Geico.
“As far as operating these businesses, it does seem like Greg is much more hands-on” than Buffett, said Pollock.