Berkshire Hathaway’s new chief still committed to dealmaking
Greg Abel’s debut Berkshire letter commits group to dealmaking
Greg Abel on Saturday used his first Berkshire Hathaway investor letter since taking over in January as chief executive to underscore his investment bona fides, committing to the principles that his predecessor Warren Buffett had long extolled.
Defending the conglomerate’s robust balance sheet, which held $373bn of cash at year-end, Abel cast himself as the protector of Buffett’s long legacy of always seeking value in dealmaking.
“Our balance sheet is a strategic asset to be deployed at the right time,” he wrote. “It allows us to act decisively, invest when others are tentative or fearful, and stand firm when financial storms roll through.”
He told shareholders that Berkshire has been active in evaluating new investments and that it would remain a key port of call when companies wanted to sell. The Nebraska-based conglomerate would be “an asset, not a risk, to America and the global financial system”, he also wrote.
He pointed to Berkshire’s $9.7bn purchase of the chemicals business of Occidental Petroleum, which it completed earlier this year, as well as its agreement to buy pest control business Bell Laboratories.
Investors and analysts traditionally scour Berkshire’s annual letter, which in the past were filled with Buffett’s personal anecdotes, for insights into how the so-called Oracle of Omaha saw the world.
Abel has already begun to reshape Berkshire’s corporate headquarters. The company last year hired its first internal legal counsel and announced a top executive from Berkshire’s energy business, the unit Abel rose up through, would become its next chief financial officer later this year.
One of Buffett’s investment deputies, Todd Combs, departed for JPMorgan Chase as part of the reshuffle.
The letter accompanied fourth-quarter results that showed Berkshire’s operating earnings had weakened, falling 30 per cent from the year prior to $10.2bn, as profits slumped within its insurance division.