Warren Buffett's planned successor bought $68 million of Berkshire Hathaway stock in one day - and might be eyeing more purchases
- Warren Buffett's likely successor bought $68 million of Berkshire Hathaway stock in a single day.
- Greg Abel only owned about $3 million of Berkshire shares before his recent purchases.
Warren Buffett's planned successor has plowed $68 million into Berkshire Hathaway, signaling he's confident in the company and views its shares as undervalued.
Greg Abel, the boss of Berkshire's non-insurance operations, snapped up 168 Class A shares at a weighted-average cost of $407,000 per share on September 29, Securities and Exchange Commission filings show. His family trust now holds 173 "A" shares worth $72 million as of Friday's close, plus another 2,400 "B" shares valued at $650,000.
Abel's recent purchases mean has a lot more "skin in the game," or a larger stake in Berkshire's future success, as he prepares to take the reins from the 92-year-old Buffett. However, he still has a long way to go before he joins Buffett in keeping the vast majority of his personal fortune in Berkshire stock.
Buffett revealed Abel as his first choice for Berkshire's next CEO in May 2021, fueling speculation that Abel would follow Buffett's example and build a material stake in the conglomerate. The Berkshire Hathaway Energy (BHE) chairman, who has earned $19 million in annual compensation for the past three years, only owned about $3 million of Berkshire stock prior to his recent purchases.
Those expectations rose after Berkshire paid Abel $870 million for his 1% stake in BHE in the second quarter of this year.
Moreover, Berkshire's "A" shares slumped to an 18-month low in September, giving Abel the chance to buy them at a discount in true Buffett style. The stock is still down 23% from its March high, raising the prospect of further purchases.
Buffett has argued for a long time that executives and shareholders should have their incentives aligned. He personally keeps virtually all of his roughly $96 billion net worth in Berkshire stock, as it showcases his deep belief in his company, and ensures that he benefits when his investors benefit, and he loses when they lose.
Similarly, Charlie Munger — Buffett's business partner and Berkshire's vice-chairman — owns nearly 4,300 "A" shares worth $1.8 billion, or most of his net worth.
By bolstering his stake, Abel has taken a step towards matching Buffett and Munger's financial commitment to Berkshire. However, the company's next leader is still a long way from being all in.