Readressing the post -Buffett Era😥

[Ulti]

 I am sad like everyone else. Now that I have a good " bead" on succession plan

I have a few ( maybe ignorant, already discussed) questions.

 

-- Who is capable of making the occasional "crazy times" investments that Mr. B. has done and sometimes able to extract a deal that we go wow. Is this the realm of Ted and Todd and are they "heavyweights" enough?

 

__ With the Management , Board etc in place; do folks still expect large volatility ( people perm selling ) when Mr. B. is no longer at the helm?  Will the Board and management

stabilize with one of the horseman and start dividends ?

 

__Culturally, the company seems very stable. Once Mr. B is gone, would the company be more influenced by outsiders ? (without the big dog there ?)

 

Sorry for the morbid topic... I am a long term holder and am curious what other people think . Thanks

 

[Ulti]

https://www.morningstar.com/stocks/why-berkshire-hathaways-success-will-continue-after-charlie-munger-warren-buffett

[Spooky]

Bring it on I say. They have had so much time and thought so hard about putting the right pieces into place for this moment.

[RadMan24]

Nothing crazy was going on when Buffett bought Apple and made his Japan investments -- and brought Abel with him to Japan, so I see that as a potential avenue for future growth should any deals develop. Perhaps Buffett values integrity and honor much more -- if that could even be possible -- after the Pilot situation and lust the potential to do deals with the Japanese even more.

[schin]

On 11/30/2023 at 1:51 PM, Ulti said:

https://www.morningstar.com/stocks/why-berkshire-hathaways-success-will-continue-after-charlie-munger-warren-buffett

 

Look at companies that have lost their founders..... I mean.... It's like Jordan and Pippen leaving the Bulls... Sports is a great analogy... teams rebuild.... The Commanders have been a disaster after Joe Gibbs and the Rypien/Doug Williams era. You can say Cleveland without LeBron James... 

 

From a business analogy, Charlie mentioned how Edwin Land departure of one of the most dominant companies out there, Kodak... ended in bankruptcy.  Henry Singleton and Teledyne.. It went from great to good at best. 

 

 

Post-Andy Grove at Intel.  The dark years of Steve Ballmer's Microsoft before Nadella.  The two periods of Apple sandwiches without Steve Jobs. Anything can happen.

 

Greg Abel might be a operator, but he's not Warren or Charlie... I mean... that's not a knock on him..  It's just big shoes to fill. And then, it's going to have a lot of cooks in the kitchen... with Ajit.... Todd C., Ted Weschler.... 

 

These transitions are hard.... GE after Jack Welch.  Citigroup after John Reed/Sandy Weil....

 

Walmart and Costco are success stories...but, again, the Vegas odds are generally against total dominance through multiple CEOs.

 

[Ulti]

8 hours ago, schin said:

Greg Abel might be a operator, but he's not Warren or Charlie... I mean... that's not a knock on him..  It's just big shoes to fill. And then, it's going to have a lot of cooks in the kitchen... with Ajit.... Todd C., Ted Weschler.... 

This is why I think that the company is going to focus on dividends going forward ( and continue with timely buybacks.) When times are tough and Berkshire is again " has last resort money to lend or use" are companies going to still go to Berkshire? Will someone at the company make another BAC call?

I think this will happen more infrequently or just go away.

[Jaygo]

According to a podcast recently it was Ted who bailed out home capital group. Small compared the gfc but still relevant. 
 

 

[Spooky]

I'm still optimistic. Charlie has compared Greg to Jim Sinegal which is very high praise and Buffett has said that he understands capital allocation as well as him. Ajit will still be there in the insurance group. Todd and Ted also seem pretty impressive. Overall, however, while the structure of the company remains in place it can keep chugging along with its decentralized businesses doing their thing.

[Mick92]

I don't know, I'm sure Buffett is doing his damnest to try and set it up so that it can continue with the same philosophy in perpetuity but I'm not sure that's realistic.

 

I'm sure Greg is a superb businessman, in the top 1%. Ajit is an incredible insurance exec, Todd and Ted both excellent investors. But they're not Buffett or Munger, realistically they are irreplaceable. Buffett, apart from everything else, may be the greatest risk manager of all time. Can you replace that overall genius at the top? Or the value of his reputation and ethics which you might dip into once every couple of decades to make a difference on something. The phone calls from people when they need to do deals, people wanting to sell to Buffett? I feel like some of this drips away.

 

Maybe it can stay pretty much the same for 2-5 years, or even 10 years, but eventually it will change. Buffett has also been shielding it from some of the stupidity of the hyper partisan US political issues but they will probably come even more into focus after he's gone and no longer controls it.

 

So I dunno, I'm holding and certainly not planning to sell even if Buffett goes tomorrow. I think it probably outperforms the S&P from here over the next decade. But, the day Buffett goes, I'm going to have to start monitoring it a lot more closely.

[MarioP]

It won't be the same without Buffett. But I think we can hope for something similar to Apple under Tim Cook. The company is different but still great.

[villainx]

1 hour ago, MarioP said:

It won't be the same without Buffett. But I think we can hope for something similar to Apple under Tim Cook. The company is different but still great.

 

I've been worrying a bit about JPM Chase when Jamie Dimon retires.  Dimon looks okay in the recent videos of his, but at the same time, he does look/sound older.

[samwise]

What happens to the cash after WB ? dividends, more buybacks, or do Todd and Ted or Greg wait for the next big market opportunity? Do they have the mandate to deploy that many billions?

[MarioP]

2 hours ago, samwise said:

What happens to the cash after WB ? dividends, more buybacks, or do Todd and Ted or Greg wait for the next big market opportunity? Do they have the mandate to deploy that many billions?

Strange question. After WB is gone Greg will be the big boss. So he will do what ever he think is good for the long term of the company. He writes the mandat and have it approve by the board. Nobody will give him mandate 

[samwise]

ok, mandate may be a bad word choice here. but question remains, what's the plan for the cash? Greg decides the next big elephant to buy?

[MCR]

Gregg Warren at Morningstar's take on this question (from ~8:35 mark to about 12 min mark): https://www.morningstar.com/markets/charlie-munger-warren-buffett-built-berkshire-hathaway-thrive-after-theyre-gone

[CassiusKing1]

What are the scenarios?

 

Berkshire continues on as is.

Cannot deploy cash, pays dividend

Activist investor, new owners breakup company

Company starts to be mismanaged.

 

In all scenarios aside from the last, you're pretty much okay.  We all know this company well enough to know when to buy/hold/sell.  I buy/hold for the first two, monitor the third and move my money on the last.

[Ulti]

Our take here is that Berkshire is eventually going to evolve from what has been a reinvestment machine into one far more focused on returning capital to shareholders…

Thansk for the post MCR

 

[Spooky]

Dividends to me go against the wishes of the shareholder base that Berkshire has cultivated. Personally I doubt Greg changes this policy.

[Xerxes]

23 hours ago, samwise said:

What happens to the cash after WB ? dividends, more buybacks, or do Todd and Ted or Greg wait for the next big market opportunity? Do they have the mandate to deploy that many billions?

Buffett put nearly $40 billion to work in the last two months of Q1 2022. After few years of not significant equity purchases. 
 

If Greg was in charge he would be have been second guessed for using nearly a third of the cash pile in two months. 
 

That he would know he would be second guessed, might also play a role in him being an effective capital allocator. He would need to do his job and fight off public misperception. 

[schin]

7 hours ago, Spooky said:

Dividends to me go against the wishes of the shareholder base that Berkshire has cultivated. Personally I doubt Greg changes this policy.

 

Steve Jobs loved cash hoards... and once he passed away, Tim Cook started doing a lot of buy back, which is a good thing to do with capital when the stock was a lot cheaper.. but, again, Steve would never had let that happen.

 

Two, Steve was never a fan for having multiple SE and Plus versions of a base product.. but, again, that mandate got thrown out the window when he passed away.

 

We'll see how it plays out...but, they cannot manage from the grave anymore.

[ValueArb]

19 hours ago, schin said:

 

Steve Jobs loved cash hoards... and once he passed away, Tim Cook started doing a lot of buy back, which is a good thing to do with capital when the stock was a lot cheaper.. but, again, Steve would never had let that happen.

 

Two, Steve was never a fan for having multiple SE and Plus versions of a base product.. but, again, that mandate got thrown out the window when he passed away.

 

We'll see how it plays out...but, they cannot manage from the grave anymore.

 

Steve was also against big screen phones, he didn't want any screen that your thumb couldn't tap every bit of it while holding it one handed. Apple definitely lost something when he died, his personal measures of product value and quality may have held up the Apple Watch another year before its release, and he may never have released the HomePod. But Apple also gained the flexibility to better address customer needs like bigger phones.

[schin]

Once Warren passes, would the AGM still be Woodstock for Capitalists? Will you buy Squishmallows of Greg Abel and Ajit Jain? Or Todd and Ted?  It'll be interesting.

 

Is there another event that will take its place? Fairfax AGM? Markel AGM?

 

After Larry Bird and Magic Johnson, there was Michael Jordan... and then, Kobe... and LeBron... I wonder who will the heir apparent Investing Guru. 

[MCR]

Article in today's WSJ online about Greg Abel and post-Buffett era: https://www.wsj.com/finance/greg-abel-berkshire-hathaway-executive-6b7d8988?st=yi3lwjna3acnbhb&reflink=desktopwebshare_permalink

[bargainman]

On 12/20/2023 at 3:53 PM, schin said:

 

Steve Jobs loved cash hoards... and once he passed away, Tim Cook started doing a lot of buy back, which is a good thing to do with capital when the stock was a lot cheaper.. but, again, Steve would never had let that happen.

 

Two, Steve was never a fan for having multiple SE and Plus versions of a base product.. but, again, that mandate got thrown out the window when he passed away.

 

We'll see how it plays out...but, they cannot manage from the grave anymore.

 

Well, Apple was a very different company.  They went from a niche high end computer maker to creating a new smartphone market with 50%+ marketshare in the US.  Tim wasn't Jobs but he adjusted to the times and market size.

[schin]

1 hour ago, bargainman said:

 

Well, Apple was a very different company.  They went from a niche high end computer maker to creating a new smartphone market with 50%+ marketshare in the US.  Tim wasn't Jobs but he adjusted to the times and market size.

 

True, but it's hard to have a string of great CEOs. Look at most banks....  Look at IBM and HP.... It's hard to create a dynasty.