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More than a decade before investors in Berkshire Hathaway answered the most important question – who would get Warren Buffett – the company’s insiders were already working on Greg Abel.
David Sokol, then CEO of the energy business in Berkshire, told Buffet in 2007 that he wanted to give his job to Abel, arguing that it was time to lead the “right lieutenant” he described himself.
He worked closely with Abel Sokol to negotiate some of his most complex agreements, including the purchase of natural gas lines, which took place one weekend after the fall of Enron. Buffett initially objected, but was eventually convinced.
“There’s a reason to hand over the title of CEO in 2008 to Greg,” Sokol said. “I’ve been doing it for a long time and I really thought I was better than Greg.”
Abel saw the potential in a small real estate business, along with buying a much larger utility; other executives saw only a rounding error. This business is now one of Berkshire’s quirks, and one of the largest residential real estate brokers in the U.S.
Sokol also recalled Abel’s speed in reducing costs and improving the efficiency of new acquisitions Northern Electric In the UK in the 1990s. Abel crossed the Atlantic to help manage the company.
“We were sitting down after two meetings and Greg had a page with all those layers crossed,” he said.
Sokol himself was once considered a natural heir to Buffett, but in 2011 he resigned from the company after a scandal over Lubrizol’s stock purchases, which was later acquired by Berkshire. U.S. securities regulators reviewed the transactions, but made no allegations.
The second existential question
Last week Abel’s fattening 90-year-old Buffett answered a question that had long hung over Berkshire Hathaway. But it certainly hasn’t put any other pressure on the debate: does Berkshire have a reason to be without Buffett and his former adviser Charlie Munger, 97, without being at the top?
In Buffett’s image, the company is almost like any other American corporation. Geico has an extensive collection of businesses that includes insurers such as Burlington Northern Railroad, furniture stores, car dealers and electricians. But just as important are public investment — the stakes of companies like Apple and Bank of America — that make Berkshire more of a mutual fund than a regular business.
Abel, a 58-year-old Canadian, may be a brilliant trader but it’s unclear whether he’s a heavy investor, some investors have quietly said.
So far, investors have only had fleeting moments to meet the man. Abel has been particularly shy in the media — he doesn’t want to comment on this article — and his appearances in front of the investment community have been brief.
In 2020, in the midst of the pandemic, he joined Buffet in an empty scenario to answer questions from shareholders. But his responses were limited, which he oversaw mainly about business, and left his boss to give wise advice, which is the main goal of a Berkshire rally for many investors. Only this month was the shareholders given a little more substance.
The initial reaction was heated, as Abel surprised the analyst with his knowledge of the energy business and clarified how the company would reduce its carbon footprint. People who have worked with him have said he is “highly guided,” “disciplined,” and “unique in number,” spreading a wealth of information, characteristics they also see in Buffett.
Board director Ron Olson Berkshire added that he was a “common word person” who had directly absorbed Buffett and Munger’s company culture over the past decade.
“He won’t be in Warren’s personality, but he has the same kind of credibility and integrity that he had for Warren,” Olson said, adding that Abel had a “hell of a work ethic”.
“He grew up on the ice, playing hockey, and he has a lot of false teeth to show. That kind of competitiveness comes. “
Rising energy
Abel found his way to the company through one of his many purchases. After working as an accountant for PwC in San Francisco, in 1992 he worked for one of the company’s energy clients, a small business known as CalEnergy.
“He did 125 percent of anything I did and then looked at things around him to make it even better,” said Sokol, who was running CalEnergy. “Greg needed very little tutoring. All he asked for was a chance. “
CalEnergy under the direction of Sokol and Abel began a deal before Berkshire he bought the company In 2000. Before his 40th birthday, Abel was named president and chief operating officer of the energy unit, in which he held a valuable 1 percent stake.
There he won many of his steaks. The division has had some of Berkshire’s biggest acquisitions, which have not been lost by shareholders who squander the $ 145.4 billion piled up by the conglomerate.
Abel has been very involved in Berkshire $ 5.1 million purchase At PacifiCorp in 2005, his $ 10.4 million purchase Nevada Energy’s NV Energy in 2013 as well as one of the company’s latest deals: $ 8 billion purchase last year for the Dominion Energy pipeline business.
“A big part of M&A is outings and Greg… Can be very charming when he’s out,” said one who has worked with Abel.
Thomas Russo, managing partner of longtime Berkshire investor Gardner Russo & Quinn, said the ability to raise a “tremendous amount of capital” has made Abel a natural chance for Buffett to succeed.
It remains to be seen whether Abel will plunge into the box of war that will be more successful than Buffett. The Berkshire gaming book, which has long since been sidelined by a bidding war, has shrunk the company’s deal at a time when other companies and investors are also joining the capital.
And Abel has yet to show that he is ready to break the mold. Company 2017 failed to bid $ 18 billion For Oncor Energy, Abel sewed it before another bidder failed, but stressed that “Greg has stuck to that style,” said the person who worked there.
It’s unclear how Abel would work with other teams that Buffett has set up, such as Todd Combs and Ted Weschler, who help manage the company’s investment portfolio, and Ajit Jain, Berkshire’s vice president. insurance operations. Jain said the couple’s relationship is respectable, unlike what Buffett and Munger have cultivated over the years.
Investor analysis is likely to accumulate money as it grows and as pressure rises above the Berkshire carbon footprint and competitive barriers. The company’s utility department, when Abel played a key role, has it he has drawn particular studies. Nevada energy spent business In 2018 it was hard to defeat the state power business to defeat a proposal.
“They protect their monopoly by all possible means,” said Nora Mead Brownell, who previously served as commissioner for the Federal Energy Regulatory Commission. “I think Warren represents a certain set of values that Greg Abel realizes in the world,” he added.
While the board has elected Abel, the company is still not given the keys. The council, after all, has been preparing for a decade in a row.
“Warren has a lot of life left. I want to emphasize that, “Olson said.” Greg is our man right now. If it’s 10 years from now, who the hell knows. “
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