After 60 years in charge, Warren Buffett is stepping down as CEO of Berkshire Hathaway later this year. Jessica Mendoza talks to WSJ’s Jason Zweig and Karen Langley about Buffet’s prolific career and Greg Abel, the man he chose to succeed him as CEO. Further Listening: - Does Warren Buffett Know Something We Don't? - The Life of One of Wall Street's Greatest Investors Sign up for WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What happens at the Berkshire Hathaway annual meeting?
Once a year, the financial world turns its collective attention to Omaha, Nebraska. That's where Warren Buffett, the longtime CEO of Berkshire Hathaway, lives and where he holds the company's annual shareholder meeting.
Thousands of people flock to the city of Nebraska from all over the country, but also all over the world.
Our colleague Karen Langley covers Berkshire Hathaway. She spent her weekend among the crowd gathered at Omaha's Convention Center.
Many, if not most of them, are shareholders of the company, but also people who are just really fascinated by Warren Buffett, who are interested in hearing what he has to say. You could see very long lines the day beforehand for people picking up their meeting credentials, the morning of the annual meeting, well before the sun came up.
It's very noticeable in Omaha that Berkshire Hathaway is having its meeting.
It sounds kind of like Coachella for finance nerds, except, like, fewer crop tops.
Buffett has, like, famously called it a woodstock of capitalism. Fair, okay. People talk about, yeah, that kind of comparison. A festival-like atmosphere, there's certainly parties and events surrounding it.
This year was Buffett's 60th shareholder meeting, and he marked the occasion with a mic drop.
I think the time has arrived where Greg should become the chief executive officer of the company at year end.
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Chapter 2: Why is Warren Buffett stepping down as CEO?
This was Buffett's last annual meeting as CEO, and he named longtime executive Greg Abel as his chosen successor.
I would still hang around and conceivably be useful in a few cases, but the final word would be what Greg said.
Chapter 3: Who is Greg Abel, Buffett's successor?
Abel helped build Berkshire Hathaway Energy into one of the company's most significant businesses. And he's been the heir in waiting for years. But the timing of the announcement came as a surprise. What was the reaction in the room when he said that?
It was fascinating. I was way up in the nosebleed seats in the press box, but it felt to me like this huge arena filled with many thousands of people went silent as Buffett started to deliver those words. And I think people realized that this was a moment of a lot of gravity, that that was taking place. And so the room fell so quiet, despite how many people were there.
And then when he finished delivering his announcement, people started to stand and applaud. And there was this big standing ovation.
That's the news hook for the day, follow-up. And thanks for coming.
Buffett is considered by many to be one of the greatest investors in American history. So how will Berkshire Hathaway and the world of investing fare without him at the helm? Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Monday, May 5th. Coming up on the show, the Oracle of Omaha is stepping down as CEO, and he's leaving big shoes to fill.
Would you say that Warren Buffett is the goat of investing, the greatest of all time?
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Chapter 4: Why is Warren Buffett considered the greatest investor?
If he's not, it's kind of hard to think of who his competition would be.
That's our colleague Jason Zweig. He's covered Warren Buffett for more than 20 years.
What really makes Buffett so extraordinary is not just the degree of his outperformance, but the length of it. I mean, we're talking about somebody who made his first investment in... 1942. And so there are plenty of people who have better performance, better track records as investors over the past 10 years, the past 20 years, maybe even the past 25 years. But 60 years? Right. I don't think so.
And it's just kind of unparalleled.
Among investors, Buffett stands alone, not just for how long he's been in the game or how well he's done, but also for his investing philosophy, which he's been honing since he was 11 years old.
He bought, I think, three shares of what then was called Cities Service, which was an oil company. He recalls that his sister got nervous about I think when the price went down a few months later, so he sold it. And, you know, it went on to, you know, make thousands and thousands and thousands of percent, teaching him the lesson that, you know, selling too soon can be a huge mistake.
I mean, 11 is, I'm not sure I knew what a stock was when I was 11. 11 is pretty early.
Yeah.
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Chapter 5: How did Warren Buffett start his investment career?
And so tell me about how his career started out. What kinds of investments was he making in those early days?
In 1956, he started his own investment partnership out of his bedroom in his house in Omaha. And so he worked at home for much of the early years and he bought some of the smallest, most obscure stocks you could possibly imagine and just made a ton of money doing it.
How did he discover those obscure companies and investing opportunities? Could you talk about sort of the way he approached investing?
Yeah, and this is another example of how unusual Buffett was. Of course, today, Nobody would do it this way because you wouldn't need to because there are commercial databases and you could just ask AI to do it for you. But what Buffett did was he had these immense volumes of Moody's industrial manuals, which were these gigantic hardcover books.
that consisted of thousands of pages of financial information on publicly traded stocks. And he started with A, and he read every page until he got to Z. Wow.
Oh my gosh. In those books, Buffett looked at a company's assets and the size of its debt, and he'd go beyond the numbers, talking to suppliers and customers.
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Chapter 6: What was Buffett's approach to discovering investment opportunities?
And if he liked what he saw in combination with the financial information, he would buy the stock no matter how small it was or how long it took.
Wow. So it was almost like he was reporting on these companies, right? Doing the groundwork and then being patient about the returns.
Yeah, exactly. I once asked Buffett what he would have done if he hadn't become an investor. And he said, I probably would have become an investigative reporter.
Buffett's strategy paid off. And as he gained success, he started expanding Berkshire Hathaway's portfolio.
He bought much larger companies when they had temporarily fallen out of favor, like American Express, The Washington Post, which then was a major public company, Coca-Cola.
The other thing Buffett did was buy private companies outright, companies like See's Candies, Dairy Queen, and Duracell.
A large part of Berkshire Hathaway's market value today consists of the private companies that Buffett bought. And that gave him the flexibility of buying in public markets when he felt stocks were cheap, but not having to when he felt they were overpriced. Then he could go to private markets and buy at a negotiated price rather than what he calls the auction price that exists in the stock market.
In addition to smart buys, Berkshire Hathaway, under Buffett's leadership, became known for rescuing businesses in distress. During the 2008 financial crisis, the company famously bailed out General Electric and Goldman Sachs. Around that time, Buffett became the world's richest person, dethroning Bill Gates. Today, Buffett is still the fifth richest person in the world.
So how significant is it that Buffett decided to step away from Berkshire Hathaway at the end of this year?
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