Business

Buffett sees activist-proof Berkshire resisting breakup call

Warren Buffett, left, talks to BNSF Railway’s executive chairman Matt Rose before the annual Berkshire Hathaway shareholder meeting in Omaha, Neb., on Saturday, May 2.
Warren Buffett, left, talks to BNSF Railway’s executive chairman Matt Rose before the annual Berkshire Hathaway shareholder meeting in Omaha, Neb., on Saturday, May 2. AP

Warren Buffett, the billionaire chairman and chief executive officer of Berkshire Hathaway, says his life’s work won’t be broken apart by activist investors once he’s no longer at the helm.

“The market value of Berkshire is going to be so great that, even if all the activists got together, they couldn’t do much about it,” Buffett said Saturday at his annual shareholders meeting in Omaha, Nebraska. He was responding to an investor’s question about how the company’s future leaders would prevent a breakup.

Berkshire owns insurers, electric utilities, factories, car dealerships, ice-cream shops and BNSF Railway, one of the largest U.S. railroads. The company’s future was a focus of the event, which drew a record crowd of tens of thousands as Buffett, 84, celebrates his golden anniversary running the business.

In television interviews on Monday morning, Buffett defended Berkshire Hathaway’s manufactured home unit and praised some of his company’s biggest investments. Buffett said Clayton Homes generally holds on to the loans it makes — unlike many mortgage lenders who resell their loans to investors — so when buyers default Clayton loses money.

“We have no interest in putting anybody in a home they can’t afford,” he said.

On Saturday, Buffett and Vice Chairman Charles Munger, 91, assured shareholders that the company’s culture will endure after they are gone and dropped hints about the characteristics of the next CEO. Buffett said his successor should have a “significant array of skills” and not just investing expertise. He wasn’t asked directly about who the board has picked to eventually take the job.

Investors have speculated that Ajit Jain and Greg Abel are the leading candidates. In the company’s annual report this year, Munger described both as “world-leading” executives who are in some ways better than Buffett. Jain, 63, runs Berkshire’s namesake reinsurance operation, while Abel, 52, oversees the energy-utility business.

That formula has built Berkshire into a massive enterprise with a market value of more than $350 billion and businesses like Geico, Fort Worth-based BNSF Railway and See’s Candies. Berkshire’s other North Texas operations include Justin Brands, Acme Brick and TTI, all based in Fort Worth; the Nebraska Furniture Mart, which recently opened in The Colony; and Berkshire Hathaway Automotive in Dallas, which owns dozens of car dealerships in several states including Frank Kent Honda in Fort Worth and the Vandergriff dealerships in Arlington.

During an interview on Bloomberg Television, activist hedge fund manager Bill Ackman said he agrees that Berkshire doesn’t need an overhaul.

“I think he’s done a remarkable job setting the company up to succeed even after he’s gone,” said Ackman, who attended the shareholders meeting. “This is one of the few cases where you can justify the conglomerate structure.”

This article includes material from The Associated Press and Star-Telegram archives.

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