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In Berkshire Hathaway’s 2014 letter, Warren Buffett wrote that the legendary conglomerate’s “future CEOs should come from internal candidates whom the Berkshire board has grown to know well.”
JPMorgan believes that it has identified the most likely internal candidate.
The bank’s analysts named Greg Abel as the most likely successor to Warren Buffett as Berkshire Hathaway’s next CEO in a new report.
Abel currently heads Berkshire Hathaway’s utility business and is relatively young at age 55. The report notes Buffett’s frequent praise of Abel.
In the 2014 letter, Buffett also wrote that the next CEO should run the company for at least 10 years and that he did not expect the board to pick a candidate likely to retire at age 65.
While JPMorgan analyst Sarah E. DeWitt believes Abel to be the most likely successor, she also left the door open for other candidates as well. Ajit Jain, the head of Berkshire Hathaway Reinsurance, was also named as a potential successor, though DeWitt believes that his age may be an obstacle at 66 years old.
But DeWitt does not expect a new Berkshire CEO to happen anytime soon. “Importantly, [Buffett] shows no signs of slowing and could possibly be at the helm for another decade in our view. In fact, his partner, Vice Chairman Charlie Munger, is 93 and also very active,” she wrote.
Buffett has served as Berkshire Hathaway’s CEO for 52 years and is currently 87 years old. DeWitt writes that in that time, Buffett’s “ability to identify attractive acquisition candidates as well as deploy huge sums of money quickly and decisively is unmatched.”
Whoever becomes the next CEO of Berkshire Hathaway, DeWitt does not expect performance to suffer greatly. Though she foresees a sell off following Buffett’s eventual retirement, DeWitt believes this will only serve to create a buying opportunity as the stock price falls.
DeWitt writes, “This could ultimately present a buying opportunity because the underlying fundamentals should continue to improve and the board could repurchase significant amounts of stock if the shares fell below 1.2x book value.”