Who is Buffett's designated successor Abel after his retirement?

The Berkshire Hathaway shareholders meeting will kick off in Omaha at 9 PM Beijing time on May 3.

This year, alongside Warren Buffett on the podium are Greg Abel and Ajit Jain, with Abel, as the successor, accompanying him for the entire duration.

The shareholders' meeting on May 1, 2020, was held online due to the impact of the COVID-19 pandemic, and Abel and Jain participated in the Q&A session alongside Buffett for the first time, representing the non-insurance and insurance businesses, respectively.

Since Charlie Munger passed away in November 2023, Berkshire experienced its first annual meeting without Munger (2024), with Abel sitting in the successor's position to Buffett's left.

In this year's February shareholder letter, Buffett mentioned Abel several times specifically.

In discussing Berkshire's capital allocation, Buffett praised Abel for demonstrating a similar patience in waiting for opportunities in stock and subsidiary investments, being able to decisively take bold action when the time comes.

Warren Buffett wrote about his investment in Japan's five major trading companies: "Over time, our appreciation for these companies has deepened. Greg has met with them several times, and I regularly keep track of their progress. I expect that Greg and his successors will hold this part of the Japanese investment for decades."

Buffett reminds us that Berkshire's 10-K filings have never been "hollow sweet nothings and pretty pictures," and this will not change under Greg's leadership.

"I am 94 years old, and soon Greg Abel will succeed me as CEO and begin writing the annual shareholders' letter. Like me, Greg adheres to Berkshire's creed—that reporting is not just an annual routine, but the responsibility of the Berkshire CEO to the shareholders. At the same time, he understands that once you start deceiving shareholders, you will soon end up deceiving yourself as well."

As the era of Buffett approaches its twilight, understanding Greg Abel may well be the key to comprehending Berkshire's trajectory over the next ten or twenty years.

This year, an article titled "Meet the man picked to succeed Warren Buffett" written by Shawn Tully was published in the February/March issue of Fortune magazine, which is probably the most detailed introduction we have seen about Abel so far.

Abel is low-key and has a gentle yet outgoing personality, being highly sensitive to numbers. Those who know him say that Abel has a bit of Warren's charm, just lacking some of the boss's signature performance talent.

As described in this feature article, he does not prefer to take a hands-off approach like Buffett; instead, he is extremely detail-oriented and values the actual driving force behind his subsidiaries.

Former CEO of Brooks, Jim Weber, described: "If you perform poorly, Greg will tell you directly and give you a few months to adjust."

(Click to read: "Interview with Smart Investment | Jim Webber, the 'business genius' chosen by Buffett: Berkshire has always been an excellent base for building Brooks, and we haven't been forced to grow.")

Professor Larry Cunningham from the University of Delaware also commented, "Greg won't let the laggards continue to lag behind."

This focus on execution and emphasis on improvement aligns perfectly with Berkshire's culture of emphasizing actual results and opposing empty commitments, gradually earning Abel high trust from Buffett.

In this process, Abel demonstrated three major traits that are strikingly similar to those of the "Oracle of Omaha": the gift of building trust, the insight to discover opportunities, and the wisdom to avoid risks.

This article systematically narrates how Abel walked from the small city of Edmonton in the Canadian prairies into the core of Berkshire, accumulating today's trust and responsibility step by step, from the energy business to overall group management.

Very rich and wonderful.

The smart investor (ID: Capital-nature) specifically translated and organized this article, dedicating it as a footnote for this special moment today.

01 About Tariffs and Global Trade

"Warren, who is your CEO successor?"

This issue may be the most frequently questioned mystery in corporate history, yet it has remained unresolved for a long time.

At Berkshire Hathaway's annual shareholder meeting, every year, in a live Q&A session hosted by Warren Buffett and Charlie Munger, shareholders always ask this classic question. The usual response from the two helmsmen, "the board has named a successor, but we will not be named". This, along with the 5-kilometre race and the coconut bang bang sugar dipping sauce display of Joy Candy, has long been an integral part of the weekend at the shareholders' meeting.

Until the afternoon of May 1, 2021 (when the shareholders' meeting was changed to an online format due to the impact of the COVID-19 pandemic), the situation finally took a turn. At that time, 97-year-old Munger unexpectedly blurted out while answering a question about the company's future culture: "Greg will continue this culture."

This "slip of the tongue" has ended the most watched and longest-running CEO succession mystery in business history.

Berkshire's investors and observers immediately realized that "Greg" referred to Greg Abel. Two days later, Buffett officially confirmed in an interview with CNBC: after he steps down, Abel will take over the helm of Berkshire.

This era, which began in 1970, accompanied by the anti-Vietnam War wave sweeping through college campuses, Elvis Presley dominating the music charts, and Nixon ascending to the presidency, is about to welcome a new successor. This announcement sets an important landmark for Berkshire's future development path.

62-year-old Abel has been one of the popular candidates for succession since early 2018. At that time, Buffett and Munger jointly appointed him and another competitor, Ajit Jain, as vice chairman and director.

Since then, Abel has been fully responsible for all non-insurance businesses under Berkshire, covering two major sectors: railroads, aerospace, and leading companies in the energy industry where Abel comes from, as well as a series of well-known consumer brands including Dairy Queen (DQ), Brooks Running, and Benjamin Moore paints.

This dazzling array of diversified businesses constitutes the largest non-financial balance sheet in the United States and contributes two-thirds of Berkshire's non-investment income. Meanwhile, 73-year-old Jain continues to oversee the insurance business segment.

Meanwhile, Buffett himself continues to personally manage a massive investment portfolio — a stock, bond, and cash portfolio worth approximately $600 billion that has seen frequent changes in recent years — with the assistance of his two long-term aides, Ted Weschler and Todd Combs. It is worth mentioning that these two aides have also been seen as "dark horse" candidates for the successor CEO position.

02 About Investment in Japan

The intersection between Abel and Buffett began a quarter of a century ago when Berkshire entered the energy sector. Since becoming CEO of Berkshire Hathaway Energy (BHE) in 2008, he has gradually built an energy empire that encompasses utilities, oil pipelines, natural gas plants, wind and solar power stations, as well as a vast transmission network, which has now become an important pillar of Buffett's business kingdom.

Today, the business under Abel's jurisdiction has an annual revenue of about $270 billion—if calculated separately, BHE could rank in the top ten of the Fortune 500 list, surpassing Microsoft and Chevron (Berkshire itself ranks fifth).

In the process of gradually gaining Buffett's trust, Abel demonstrated three key traits identical to those of the "Oracle of Omaha": a knack for building trust, an eye for discovering opportunities, and the wisdom to avoid risks.

As Buffett said in 2021: "There are many smart people in this world, but some smart people do many stupid things. Greg is a smart person, but he would never do something stupid."

Of course, the 94-year-old Buffett has not announced any retirement plans, and his brilliant performance at the shareholder meeting in May 2024 proves that his thinking is still sharp.

However, it is important to note that Berkshire's overall performance is no longer as brilliant as in the past. From 1965 to 2003, Berkshire's average annual return rate was as high as 19.8%, exceeding the S&P 500 index by nearly 10 percentage points each year. However, in the past decade, Berkshire's average annual return rate was 11.6%, lower than the S&P 500 index's 13.2%.

"The only reason for the existence of a diversified enterprise group is to outperform the S&P index," said Dave Cote, who led the diversified manufacturing giant Honeywell from 2002 to 2017.

For a long time, Buffett has successfully resisted the impact of aggressive investors trying to "release value." Even after him, Berkshire will still maintain a strong defense system.

Despite having donated more than half of his stake in Berkshire to charity (primarily to the Bill and Melinda Gates Foundation) since 2006, Buffett still controls over 30% of the voting rights.

In addition, he modified his will (during last year's Thanksgiving) and decided to donate almost all of his estate to a charitable trust managed by his three children, Howard, Peter, and Susan.

According to the will, this wealth will be distributed in batches to various charitable causes over the ten years following Buffett's death (including foundations that they manage themselves).

Therefore, the large number of Berkshire shares held by this trust will effectively prevent potential threats from activist investors to the company for many years to come. Meanwhile, Buffett has appointed Howard to succeed him as chairman, further strengthening Berkshire's defense system.

However, as the Class A shares held in trust are converted into Class B shares for charitable purposes, external investors, including fund managers, ETFs, and individual shareholders, will gain increasing voting rights.

This power transfer is likely to occur during Abel's term.

Despite Berkshire's nearly trillion-dollar market value making it difficult for private equity funds or industrial giants to orchestrate a complete acquisition, the dispersion of voting rights may invite disturbances from activist investors.

03 About the Cash in Hand

In stark contrast to the globally renowned Buffett, little is known about Abel's background, personal style, and management philosophy.

Except for one or two events he attended with Buffett, he has never accepted interviews from business media, and his public appearances have mainly been limited to the last three Berkshire shareholder meetings—last year he took over the podium from the late Munger (who passed away at the end of 2023).

Berkshire Hathaway Energy declined an interview request from Fortune magazine for Abel, but Buffett replied in an email, stating: "I am extremely satisfied with Greg's performance. However, I no longer accept interviews. At 94, not only has my speed in bridge diminished, but many other activities have also gradually decreased or been completely canceled. Nevertheless, I still enjoy it and can still do a few things well."

However, through interviews with individuals familiar with Abel, reviewing his past personal experiences and management philosophy shared in public, as well as the actual performance he has delivered at Berkshire, a clear image gradually emerges: he is a leader whose mental temperament is very close to Buffett's, but he is likely to carve out his own path.

Ultimately, for all those who care about Berkshire, there is only one real concern: Warren Buffett once created the greatest wealth-generating machine in Wall Street history. But after him, even with a successor personally chosen by him, will they be able to steer this behemoth?

If it is said that Buffett's chosen successor possesses simple and approachable qualities, it is likely that no one would be surprised. Those who know Abel well say that he has quite a bit of Warren's style, just lacking some of the boss’s signature performance talent.

Abel grew up in Edmonton, a prairie city in Canada, which is known as the "Oil Capital of the Nation" and is famous for its alternating cycles of economic prosperity and recession. His mother was a homemaker who also worked as a legal assistant, while his father was engaged in fire extinguisher sales.

"In that era, people were sometimes employed and sometimes unemployed," Abel recalled in an interview with the Horatio Alger Association, an organization that provides scholarships to extremely poor students, of which Abel is a long-time supporter. "But family and close friends always have the power to help you build your dreams."

His first business venture was riding a bicycle to deliver advertising flyers door to door, earning $0.25 for each one.

Abel in his childhood—visible in the photo with a messy Beatles-style hairstyle—then began collecting discarded soda bottles. He was constantly looking for better routes home to discover more abandoned bottles along the way. Every day after school, he could pick up as many as 5 bottles, and by the weekend, his room could be piled with 20 bottles, worth about 1 dollar.

After entering high school, he helped at the company where his father worked, responsible for filling fire extinguishers.

Young Abel's lifelong passion for ice hockey began in his hometown of Edmonton, a city known worldwide for the legendary Oilers player Wayne Gretzky.

His ice hockey initiation came from his uncle Sid Abel, a Hall of Fame hockey legend who played for the Detroit Red Wings and the Chicago Black Hawks for 14 seasons.

Little Greg trains on the ice every day until his parents urge him to stop for dinner. This rough sport has taught him the true essence of teamwork. "Playing ice hockey will make you understand that fighting for the team is much easier to succeed than going solo," Abel said.

Until his mother Bev passed away at the end of 2022, he would call her every July 1 to analyze in depth the Oilers' signings and mistakes during the off-season.

Abel's simple Midwestern values perfectly align with the urban character of Des Moines, where he currently resides (the headquarters of Berkshire Energy). He coaches his son's youth hockey team at the Abel Ice Arena, which he funded himself, located within Des Moines' large sports complex RecPlex. This year, he stepped down from the head coach position to serve as an assistant coach to alleviate some pressure.

According to his friends in Des Moines, if you encounter Abel at the Iowa State Fair or the Calgary Stampede, you are more likely to think of him as a local teacher or bank employee rather than someone about to take on one of the most important positions in American business.

"His charisma can fit into any occasion," said former Wells Fargo executive Mark Oman. "As a neighbor, he's the kind of unassuming, down-to-earth person who's best suited for watching Oilers games or NFL football games together."

Oman added that Abel has a great sense of humor. Last year, when they watched the Olympics together, Abel joked that he finally found a competition he could win: "I can go participate in the Iowa Curling Championship." He joked that, after all, in the Hawkeye State, there is hardly any competition in curling.

04 About Insurance and AI

Those who know Abel well say he excels at building deep interpersonal relationships. "He can become friends with people as soon as he meets them," Oman described, "though he is not extroverted or flamboyant, he is 100% friendly. No one creates a party atmosphere better than Greg—not through exaggerated means, but by personal care that ensures every guest has a great time."

Even when busy, Abel is happy to provide selfless advice.

Professor Larry Cunningham from the University of Delaware (author of several studies on Buffett) exclaimed: "He possesses extraordinary wisdom, but the wonderful thing is that you never feel stupid or irrational in his presence. He always makes people feel like they're in a warm spring breeze."

Dawn Farrell, the current chair of the pipeline giant Trans Mountain, has formed a friendship with Abel through their business collaboration and often seeks his advice: "If I need strong advice on certain business issues that are unrelated to him, he always takes the time to help me sort out my thoughts."

In the eyes of former Honeywell CEO Dave Cote, Abel's commitment to the Horatio Alger Association is particularly impressive. This organization provides scholarships to students in extreme poverty, many of whom have suffered abuse, slept in cars with their mothers, or witnessed their families destroyed by drugs.

Abel served as the chairman of the organization in 2018 and continues to play an important role in the executive committee.

"He has done a lot for these children," Kurt said. Moreover, he believes that Abel is not only passionate about public welfare but also humble and sincere. "Given his status, he could have chosen to be indifferent and distant to protect himself. I have seen too many people with far less status who behave in a much more arrogant manner."

Abel's ability to succeed in the succession competition may be due to his gentle and outgoing personality, which is closest to Buffett—this similarity holds significant business advantages.

Of course, you won't see Abel dancing with the Nebraska University cheerleaders like Buffett, riding a bull through the streets of Omaha, or singing "My Way" on The Today Show with a ukulele—these classic scenes have shaped Buffett's legendary image.

But Abel showcases the "charisma of a big shot" in a unique way: he confidently wields a microphone as he moves through the audience at the Berkshire annual meeting, explaining the technical details of utilities in layman's terms; he has inherited Buffett's genuine charm, a quality that has helped the latter earn the trust of everyone from regulators to stubborn founders—those founders who are only willing to entrust their life's work to someone they can trust.

Oman pointed out that Abel has the "ability to digest massive amounts of information." Business partners revealed that he can even "speed read" balance sheets and income statements, quickly grasping key data.

Buffett is full of admiration for his enthusiasm for work, jokingly calling "Greg discovered a time-space rift in Des Moines that exceeds 48 hours a day."

Abel's profound understanding of the mechanisms of business operations, especially regarding the flow of every dollar, began during his studies at the University of Alberta. He initially focused on finance, then switched to accounting to better understand the relationship between the balance sheet and the cash flow statement.

After graduating in 1984, he joined the Edmonton branch of PricewaterhouseCoopers (PWC). A few years later, he was assigned to the San Francisco office for a short-term secondment.

In 1991, Abel became the auditor for CalEnergy, the second-largest geothermal power company in the United States. This experience shaped his management philosophy and introduced him to key mentors in his career.

05 About Patient Investment and Decisive Swinging

At that time, Buffett's childhood friend and Berkshire board member Walter Scott hoped to achieve diversification for his engineering company Peter Kiewit Sons' by acquiring the heavily indebted CalEnergy. He already had a suitable candidate in mind to run the company — David Sokol.

Sokol, the 35-year-old business genius, has just founded a waste-to-energy company in Omaha and successfully gone public, making a fortune.

Kiwet Company acquired a controlling stake in CalEnergy for $28 million, and Sokol promptly took office, appointing 28-year-old Abel as the company's accountant.

The Kuwaiti culture profoundly influenced Abel's working methods and negotiation style.

This company advocates a simple and unpretentious spirit of hard work: employees serve for life, participating in the construction of dams, bridges, and oil platforms in various locations.

Sokol became Abel's trading mentor, while the 20-year-older Scott set a leadership example for him.

In 2020 (the year before Scott's passing), Abel interviewed his former boss at a charity event in Omaha, guiding Scott to recall his childhood memories of mowing grass with a sickle on the farm, sleeping in a work shed while surveying the Monticello Dam during summer vacations in college, and his experience of working 18 different jobs over 12 years.

Abel admitted that he loves visiting landmarks such as the St. Lawrence Seaway and the Garrison Dam, projects that Scott had fought for that fascinate him. He listened with admiration to Scott's memories on stage, occasionally exclaiming, "That's amazing, I love this story!"

The technology entrepreneur David Wit, then a director at CalEnergy, witnessed the operation of the iron triangle formed by Scott (Chairman), Sokol (CEO), and Abel (Financial Architect). He was amazed by how this team dared to take risks in acquisitions while also insisting on thoroughly understanding the target's financial data and anticipating potential risks before taking action.

"Scott has a unique insight," Witt told Fortune, "Greg combines approachability with sharpness: humble and hardworking, without the arrogance of the elite, and more importantly, truly understands numbers."

During this period, CalEnergy began a series of acquisitions, including a UK utility company, which Abel successfully transformed into a profit-generating machine.

This achievement has earned high praise from Scott, who also recommended Abel's talents to his friend Warren Buffett.

Subsequently, they also acquired a major power supplier and renamed the company to MidAmerican Energy.

But during the late 1990s energy market frenzy, utilities remained a niche—investors were eager to pay hefty premiums for companies like Enron, AES, and Calpine, as these companies continuously acquired transmission networks, power plants, pipelines, and utility assets to cater to the fully deregulated energy market.

The China-US Energy focuses on acquiring regulated assets that have been overlooked by the boom, and its monopoly position and stable customer base are exactly what emerging companies lack.

Scott keenly realized that these "cash cow" type assets were exactly to Buffett's taste.

In 2002, Buffett recalled in an interview with Andy Serwer for Fortune: Scott, who had left Qwest and was then in charge of the fiber optics company Level 3, flew from Omaha to Carmel, California, to persuade him to acquire China National Energy at a family dinner at Buffett's sister's house.

"Walter pulled me into the room and told me that the utility company had been trying to explain its business model to Wall Street analysts, but the analysts were not interested because they were more focused on companies like AES and Calpine, which had fast trading rhythms and frequent mergers and acquisitions," Buffett recalled.

Scott asked Buffett if he would be willing to privatize Sino-American energy with him and the Sokol and Abel teams.

Buffett has always favored contrarian investing, and he is very excited about this idea. In October 1999, Berkshire announced the acquisition of a controlling stake in China Energy, and Scott joined as a minority shareholder.

With the comprehensive opening and crisis of the energy market, Chinese and American energy quickly became the "high-quality buyers" for major enterprises when disposing of assets.

In 2002, Williams Companies sold the Cohen River gas pipeline to China US Energy for $960 million. This pipeline connects the Rocky Mountains, Las Vegas, and California, and the price was several hundred million dollars lower than the valuation two years earlier.

In the same year, Sokol and Abel acquired Northern Natural Gas Co. for $928 million, which is a 17,000-mile natural gas pipeline network connecting the Texas Permian Basin and the upstream regions of the Midwest. The price of this deal was about $600 million less than what Dynegy paid to buy it from Enron a few months earlier.

According to Sevo, Buffett was "as excited as if he had just caught a giant tuna" when recounting these achievements.

06 About the Depreciation of the US Dollar

Since 2007, Buffett began sending Sokol to reorganize the problem subsidiaries under Berkshire, taking over insulation materials manufacturer Johns Manville and private jet operator NetJets.

The following year, Abel was promoted to CEO of China-U.S. Energy.

Sokol's outstanding performance as the "firefighter" led many investors to believe he was the most promising successor for the CEO position. However, in 2011, Sokol suddenly resigned after being questioned about personally purchasing shares of Lubrizol just before recommending its acquisition to Buffett (Berkshire later completed the acquisition of Lubrizol). Fortune magazine attempted to contact Sokol via email but did not receive a response.

After Sokol's departure, Abel's promotion has become a foregone conclusion.

After taking the helm of the energy sector, he continued the momentum of strong profit growth, skillfully used Berkshire's strong balance sheet to acquire assets at low prices, and used all cash flow to expand the business, creating the compound interest miracle that Buffett cherishes.

In 1997, CalEnergy had a revenue of $2.3 billion and a profit of $139 million; by 2022, Berkshire Hathaway Energy (BHE) saw its revenue soar to $26.4 billion, with a profit of $3.9 billion.

Abel also avoided a potential public relations crisis for Berkshire regarding environmental issues through a far-sighted negotiation, further solidifying the company's image in the eyes of environmentalists and regulators.

At that time, the hydroelectric dams along the Klamath River in Oregon and Northern California were damaging the fishing resources of the Indian tribes. Abel facilitated an agreement with a patient and flexible negotiation style: China National Energy would shut down these dams, provided they could continue to operate for a period of time to recover some of the investment, while the state government issued bonds and slightly raised electricity prices to cover the dismantling costs.

This historically largest dam removal project was completed earlier this year, and the Klamath River has now been restored to free-flowing conditions, which is expected to bring new fishing bounty soon, benefiting the local indigenous tribes' fishermen.

In a video interview in 2015, Abel summarized his negotiation style by saying: "The key is, how do you get the other party involved? How can we become long-term partners?"

Whether serving as the CEO of Sino-American Energy from 2008 to 2018, or subsequently overseeing all industrial business segments at Berkshire, Abel has demonstrated a strong, hands-on management style and has become a key proponent of green energy infrastructure development in the United States.

Under his leadership, Berkshire has made significant advances in the solar energy sector, while also becoming the largest regulated wind power utility company in the United States, operating numerous wind farms in Texas, California, and the Midwest, particularly in Iowa.

At the Berkshire Annual Shareholders' Meeting in May 2024, Abel announced that just weeks earlier, on Earth Day, strong winds powered the wind turbines, meeting the electricity needs of over 800,000 Iowa customers from Sino-American Energy. (In mid-2022, Berkshire acquired an 8% stake in BHE held by the Scott family and Abel for $8.7 billion, with Abel cashing out 1% of his stake for $870 million.)

In the manufacturing, service, and retail sectors (with a scale of $165 billion, covering dozens of subsidiaries such as NetJets, Benjamin Moore, Clayton Homes, etc., excluding railway and energy businesses), Abel has also brought significant improvements, increasing the operating profit margin from 4.9% in 2017 to 7.6% in 2023.

Unlike Buffett's "hands-off management," Abel is hands-on and shows no tolerance for inefficient performance.

Jim Weber, the former CEO of Brooks Running, revealed that Abel visits the company’s headquarters in Seattle several times a year to discuss company strategy with the management team. "If your performance is lacking, he will tell you directly and give you a few months to adjust," Weber said in an interview during the 2021 Berkshire Annual Shareholders Meeting.

Larry Cunningham also said in the interview: "Greg is not going to let the laggards continue to fall behind. If you're not doing well, you'll get a call from him. ”

Buffett himself admitted in an interview with CNBC in 2023: "Greg may be tougher than me in terms of execution." He can still leave with a smile after the execution, and the person who is executed can feel good. ”

07 About the Efficiency Department's Work

From the outside, Abel seems poised to take over a stable and well-managed business empire, but in reality, Berkshire faces several challenges.

The overall performance in recent years has been acceptable, but there has been a noticeable decline compared to the glorious achievements of the past. Some subsidiaries that once thrived are currently showing weak performance:

The auto insurance giant GEICO is far behind its competitor Progressive in adopting connected car technology for pricing risks, resulting in a loss of market share.

BHE's profits have declined from their peak in 2022 due to wildfire compensation.

The subsidiary railroad company BNSF has ranked last in return on investment among the five largest railroad companies in the United States over the past two years. Buffett has publicly stated that BNSF urgently needs to "significantly reshape its cost structure."

Buffett himself also admitted that some of the companies under Berkshire have performed poorly for a long time and there are some "dragging behind" business segments.

In the face of these challenges, how will Abel respond, and can he continue Buffett's legend? This is not only related to the future of Berkshire but also to Wall Street's confidence in this "wealth machine".

Abel can boost performance through a three-pronged approach and revitalize underperforming businesses. However, these measures will inevitably impact Berkshire's long-standing competitive advantage – the high degree of independence of its subsidiaries, which is at the core of Berkshire's business ecosystem.

In the traditional model, Berkshire acquires high-quality companies at reasonable prices and grants them ample autonomy, a form of "non-interventionism" that allows it to act as the "last buyer" in times of crisis. Investment manager Adam Mead, who authored an authoritative work on Berkshire's financial history, believes this is precisely Berkshire's key competitive advantage.

Strategy 1: Set profit targets and change the CEO if necessary.

Buffett rarely sets profit targets for subsidiary CEOs, nor does he directly replace management due to poor performance. However, Abel may challenge this practice.

"He will pressure us like any excellent manager would." said Troy Bader, CEO of the Ice Queen (DQ).

Recently, Abel's management style has been reflected; he has dispatched Adam Wright, a 47-year-old executive who successfully managed Sino-American Energy, to take over the management of Pilot Travel Centers, the largest truck service center chain in the United States.

Wright was once an NFL halfback, and Buffett praised him as an "outstanding executive." Currently, Wright has begun renovating old convenience stores and optimizing the company's financial situation.

Strategy 2: Establish an Operations Management Team

This structure is a first in Berkshire's history, but it is likely to become a necessary move.

It should be noted that Abel will receive substantial support - in the insurance business, the experienced Ajit Jain continues to steer the ship; in managing a large portfolio of stocks and bonds, he can also rely on Todd Combs and Ted Weschler.

Legendary CEO coach Ram Charan pointed out: "Greg cannot personally manage 80 subsidiaries." David Kass, a professor at the University of Maryland, believes that Abel can categorize the non-insurance businesses by industry, with each group having around 20 companies managed by dedicated personnel.

Strategy 3: Integrate Procurement and Operational Resources

Successful corporate groups like Honeywell and Danaher have achieved economies of scale by centralizing the procurement of raw materials and components and promoting "best practices" across various factories.

In contrast, Berkshire's current synergies are mainly reflected in the financial aspect, such as the ability of the headquarters to provide financing for Clayton Homes at rates lower than those of the banking or bond markets.

As Mead pointed out, Berkshire has not integrated on the procurement side, such as not encouraging its subsidiaries to jointly purchase aluminum or semiconductors, nor has it promoted cross-selling for GEICO insurance.

Warren Buffett acknowledged that as Berkshire expands in size, it is impossible for the company to replicate the super high returns of the past 40 years.

However, he believes that Berkshire is still likely to outperform the S&P 500 index by 1 to 2 percentage points. The most likely scenario is that Abel will largely continue the basic formula that has led Berkshire to success:

At critical moments, as the "last buyer," capable of writing checks worth billions of dollars;

Increase equity investments when the stock market is sluggish, and timely reduce holdings when valuations are high.

Buy back shares actively when the company's market value is below its intrinsic value.

As for what Berkshire's true "intrinsic value" is—perhaps, aside from Buffett himself, no one is closer to the correct answer than Greg Abel.