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Lawrence A. Cunningham’s Quality Investing: Berkshire Hathaway’s CEO-in-waiting has a lot of Warren Buffett in him — plus more

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It’s confirmed: Warren Buffett’s successor as CEO of Berkshire Hathaway
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will be Gregory Abel, currently the company’s vice-chairman. While no one can match the unparalleled record Buffett set as both an investor and a manager, Abel is the right fit: a player and a coach who has a light-touch and makes a high-impact.

As a manager within Berkshire’s culture famous of autonomy and decentralization, Abel, 59, is aptly low-ego and hands-off. A deep business knowledge and wisdom that he gladly offers when asked, one of the most important roles of the Berkshire CEO when overseeing scores of high performing subsidiaries.

As a capital allocator, Abel has a proven track record. Across three decades, he has made at least a dozen major acquisitions at Berkshire and before, totaling at least $40 billion and resulting in a business that today owns more than $100 billion in assets.

Buffett has no plans to leave the scene, but when he does Abel will benefit from a valuable Berkshire brain trust he knows well. In addition to two seasoned portfolio managers, and Warren’s son, Howard on the board of directors, Abel can rely on Ajit Jain, fellow vice chairman in charge of insurance operations. Expect Abel to consult Jain as a business partner and confidant, akin to how Buffett has long had Charlie Munger as a check against improvident investments or acquisitions.

Abel has a Midwestern sensibility and is a team player. He’s lived in Des Moines, Iowa for close to two decades, with shorter periods in Omaha, Neb. and San Francisco. Born in 1962 in Edmonton, Alberta, he has played hockey all his life, which contributes to his sense of teamwork.

Abel earned a scholarship to the University of Alberta, made Dean’s list and worked summers as a camp counselor and mentor to city kids. After a stint in the mid-1980s at PricewaterhouseCoopers, Abel moved in-house to a client, CalEnergy (CE), a pioneer in geothermal energy.

It was at CE, a few years later, that Abel would meet two of his most important mentors: long-time Berkshire director and Buffett’s friend Walter Scott and business executive David Sokol. In 1991, Scott and Sokol acquired a large stake in CE. With Abel’s help, they built the company from a $240 million regional energy concern into a major force in the industry, culminating in its $4 billion acquisition of MidAmerican Energy in 1998.

The next year, at Scott’s invitation, Berkshire bought most of the company, renamed MidAmerican, with Abel owning a small stake alongside Berkshire. Today called Berkshire Hathaway Energy, Abel still owns that stake, representing an overwhelming part of his substantial net worth, along with a meaningful amount of the parent company’s stock.

Building Berkshire Hathaway Energy into an industry giant, Abel has led many acquisitions, including AltaLink ($2.9B), Nevada Power & Light ($5.6B), PacificCorp ($5.1B), Kern River ($0.9B), Northern Natural Gas ($1.9B) and Dominion Energy ($9.7B). Abel and his team have been especially active in acquiring assets concentrated in alternative energy sources, especially wind and solar, including Alta Wind, Bishop Hill Wind, Juniper Wind and Topaz Solar Farms.

As a business leader, Abel has been a director of Berkshire, Kraft Heinz , Edison Electric Institute and two mutual insurance companies serving the energy industry.

Outside of the office, Abel has served on the boards of the Hockey Canada Foundation and Mid-Iowa Council Boy Scouts of America and has supported Future Leaders in Action, the University of Iowa Foundation’s Cornea Excellence Fund, and the American Football Coaches Foundation. In 2018, he received the Horatio Alger Award.

In my 2014 book, Berkshire Beyond Buffett: The Enduring Value of Values, I explained how Berkshire culture will help keep the company together long after Buffett. The CEO job includes overseeing the subsidiaries, allocating corporate capital and making new acquisitions. The most important general trait is a knowledgeable commitment to Berkshire culture, including permanence, autonomy, and acquisitiveness.

Thanks to mentors like Buffett, Scott and Sokol, Abel has been an outstanding player, while gaining plenty of experience as a coach as well. In his new role, in addition to coaching his managers, some of today’s newer Berkshire shareholders need coaching too. As for the longstanding owners, they can be sure of one thing: Abel will be a skillful and faithful steward. 

Lawrence A. Cunningham is a professor at George Washington University, longtime shareholder of Berkshire Hathaway, and publisher, since 1997, of The Essays of Warren Buffett: Lessons for Corporate America.

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