Warren Buffett is Getting Older and Berkshire Hathaway Shareholders Are Getting Worried

About 61 years ago, Warren Buffett purchased Berkshire Hathaway stock. At the age of 34, he took control of the struggling textile company, unhappy with its management, a decision he later regretted. Over two decades, there were numerous unsuccessful attempts to revive the company, eventually leading Berkshire Hathaway to exit the textile industry. However, this marked just the beginning of Warren Buffett’s journey in the stock market.

On his 93rd birthday, Warren Buffett still leads the company. Emerging from the challenges of what he once called a “terrible business” about which he had little knowledge, Buffett built one of the most iconic conglomerates in the United States, now valued at over $820 billion.

Warren Buffett’s 93rd Birthday and Wedding Anniversary

As Warren Buffett celebrates his 93rd birthday on Wednesday, August 30, there’s an additional reason for festivities beyond just his birthday. It also marks his wedding anniversary. In 2006, on his 76th birthday, he quietly married his longtime partner, Astrid Menks, in an intimate, private ceremony.

However, don’t anticipate any extravagant dining celebrations from the couple. Buffett is known for his simple culinary preferences, which include favorites like Dairy Queen, Coca-Cola, and See’s Candy. On occasion, he has even been spotted enjoying a pack of Oreos for breakfast.

“I once quipped to Fortune that I consulted the actuarial tables and discovered that 6-year-olds have the lowest mortality rate,” he humorously shared. “So, I opted to adopt the eating habits of a 6-year-old; it’s the safest approach I can take.”

Warren Buffett, born in Omaha, Nebraska, in 1930, earned an economics degree from Columbia University in 1951. In 1959, he crossed paths with Charlie Munger, his lifelong business partner, and remarkably, the two have never engaged in a disagreement.

Naturally, their partnership has proven exceptionally lucrative. Presently, Buffett ranks as the world’s seventh-richest individual, boasting a net worth of $120 billion, as reported by Bloomberg’s Billionaires Index. This marks a slight drop in the global rankings compared to the previous year, despite a $20 billion increase in wealth.

To put this into perspective, Buffett has amassed more than $3.5 million in earnings every single day of his life. He has pledged to donate the majority of his fortune to philanthropic causes, with a substantial portion earmarked for the Bill & Melinda Gates Foundation upon his passing.

Curious about how much the world has changed since Buffett’s birth? The transformations are staggering:

Dow Jones Industrial Average

• August 29, 1930: 240.42
• August 29, 2023: 34,852.67

Inflation-adjusted value of his first investment ($114 for three shares of Cities Services Preferred)

• 1930: $2,112.05
• 2023: $114

Price of a gallon of gas

• 1930: 10 cents
• 2023: $3.827

Average American net income

• 1930: $4,887
• 2022: $61,900

Berkshire Hathaway’s Diverse Portfolio

Berkshire Hathaway, known for its decentralized structure, has significant stakes or complete ownership of various businesses, including BNSF Railway, Geico insurance, Pilot travel centers, Borsheims jewelry, Dairy Queen, and Pampered Chef. It also houses the esteemed See’s Candies, a business Buffett admires for its low capital requirements and strong cash generation.

Bill Smead, a devoted Berkshire shareholder, initiated his investment in 2003 when the company had already made significant acquisitions in insurance and energy. He marvels at the remarkable expansion of Berkshire’s operations and share value since then.

However, the conglomerate faces uncertainties about its future. Warren Buffett is in his 90s, and his partner and Co-Chairman, Charles Munger, is nearing 100. Shareholders, analysts, and investors are increasingly calling for transparency, especially concerning succession planning.

Warren Buffett’s reputation extends beyond being Berkshire Hathaway’s CEO; he is America’s most renowned and trusted investor. Berkshire Hathaway is not just one of the largest companies in the S&P 500 by market capitalization; it also holds substantial stakes in eight S&P 500 giants and ranks among the top institutional investors in Apple.

The potential departure of Warren Buffett could affect the stock’s value, with many investors holding these shares for generations. Future leadership could subject the company to increased scrutiny, calls for breaking it up, and debates on corporate governance and dividends.

Investors are eager for Berkshire Hathaway to provide insights into its post-Buffett plans. While Warren Buffett remains active and the company maintains robust performance with substantial cash reserves, some investors express concerns about the eventual leadership transition. They recognize the need for the right leader to maintain the current structure and success.

Warren Buffett’s Investment Strategy

Warren Buffett’s investment strategy focuses on identifying high-quality businesses at reasonable valuations and creating a diverse portfolio of companies with enduring competitive advantages. He utilizes the insurance “float” for strategic investments, resulting in impressive returns over the years.

Buffett’s expertise is highly regarded, but his reserved approach frustrates analysts who struggle to cover his company due to a lack of investor relations, annual shareholder meetings, and earnings calls. Some hope for a more interactive approach with analysts under future leadership.

Despite concerns about the post-Buffett era, many shareholders have grown confident in the sustainability of Berkshire Hathaway’s model, considering factors like tax implications and long-term investments. In case of a significant post-Buffett sell-off, the board may step in to repurchase shares.

After Warren Buffett’s departure, there may be calls to break up the company, a debate that has historically arisen in conglomerates. Some favor maintaining the current structure, appreciating the autonomy it provides to operating companies and stock pickers, while others view Berkshire’s size as a growth impediment.

Greg Abel, the designated successor, is expected to assemble a team of capable, principled managers who uphold Buffett’s standards of simplicity and corporate culture. However, the company’s annual shareholder meetings may become more business-focused and less informal under Abel’s leadership. He is described as intelligent and analytical but less folksy than Buffett.

Greg Abel, aged 61 and with an accounting background, played a pivotal role in Berkshire’s entry into the energy sector. His responsibilities expanded to include all non-insurance operations in 2018, positioning him as a key figure in Berkshire Hathaway’s future.

Conclusion

Warren Buffett, now 93, reflects on his successful investments. Leading Berkshire Hathaway, questions arise about its future without him. Buffett’s strategy involves quality businesses and diverse portfolios, but his reserved style frustrates analysts. Shareholders are confident, but debates over splitting the company continue. Successor Greg Abel may bring analytical skills. Investors watch Berkshire Hathaway’s transition post-Buffett.