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What Will Berkshire Hathaway Look Like After Warren Buffett?

By Matt Frankel – Aug 22, 2021 at 6:21AM

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How will the massive conglomerate change in the future?

Berkshire Hathaway (BRK.A 0.05%) (BRK.B 0.13%) CEO Warren Buffett is now in his 90s, and he isn't going to be at the helm of the massive conglomerate forever. In this Fool Live video clip, recorded on Aug. 9, 2021, contributor Matt Frankel, CFP, and Industry Focus host Jason Moser discuss what Berkshire could look like in the post-Buffett era. 

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Jason Moser: I think I saw the numbers, they sold some, they bought some but it wasn't anything out of control there. It certainly wasn't in line with the amount the money that they spent buying their own stock. That just doesn't really feel like a surprise at this point. It does feel like, you know what you're going to get with this business, you got Warren and Charlie running the show here, it's Berkshire Hathaway, you know what you're getting. By the same token, and we talked about this all the time, investing is about the future, it's about what's going to happen. We have to start looking at Berkshire Hathaway through the lens of Greg Abel and Todd, and Ted right? These are the three big names, who are going to have a lot to do with where this business goes in the coming decade and beyond. Of course, Warren and Charlie, if they've stuck within their circle of competence, so to speak, don't feel like they really have that prowess when it comes to tech, which is probably not the greatest time, because tech is really just proliferating in every way. What do you think the Berkshire Hathaway of the future looks like? It feels like this business may have to make some kind of meaningful pivot, I don't want to say remain relevant, but at least in order to grow, in order to stay at the top of the conversation for investors over the next decade and beyond, it feels like they're going to have to make some kind of a pivot there.

Frankel: There's a lot of speculation as to what the Berkshire of the future might look like. It could look very much like it does today.

Moser: Yeah.

Frankel: In which case, a lot of investors are going to think it's boring, like you just alluded to. Greg Abel, he's going to be in charge of the non-stock portfolio side of the business for large part. Ted and Todd are going to have pretty much full control of the investments. They have been taking more of a tech-focused approach, the newer companies. They were where the Snowflake investment came from, they were where Berkshire's Amazon stake came from. 

Moser: The Brazilian payments investments.

Frankel: Right. The Brazilian investments, they were the ones who first bought Apple stock in the portfolio and they've done really well so far. A lot of people think that eventually some parts of Berkshire's business might be spun out. That's another thing that I've heard, some of the more legacy slow-growing, capital-intensive businesses like the utilities, maybe that could be spun out eventually. I don't necessarily see that happening, but there has been speculation to that. I think the new management will be more aggressive in deploying that capital. Because today's investors don't want a stockpile of cash, they want you to put that to work.

Moser: Yeah.

Frankel: Whether that's the right or wrong way to go is not for me to say. But a lot of investors, myself included, are not fans that there's a $140 billion of cash sitting on the sidelines.

Moser: It's a lot of money.

Frankel: Do something with it. Buy back $140 billion a year on stock, but do something with it. I could see the incoming investment managers who currently only manage a small percentage of the portfolio. I want to say it's like $12 billion between the two of them of a $300 billion stock portfolio.

Moser: Yeah.

Frankel: They don't have a ton of control just yet, but once they have full control, I can see it being more of a modern portfolio. You'll find a lot of the more growth for your stocks we talk about it in there at some point in the future, and I can see them being more aggressive with deploying capital.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Matthew Frankel, CFP owns shares of Apple and Berkshire Hathaway (B shares) and has the following options: short November 2021 $140 calls on Apple. The Motley Fool owns shares of and recommends Amazon, Apple, Berkshire Hathaway (B shares), and Snowflake Inc. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon, long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2022 $1,940 calls on Amazon, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

Stocks Mentioned

Berkshire Hathaway Stock Quote
Berkshire Hathaway
$306.39 (0.13%) $0.40
Berkshire Hathaway Stock Quote
Berkshire Hathaway
$463,000.02 (0.05%) $220.02
Apple Stock Quote
$142.16 (-0.34%) $0.49 Stock Quote
$89.09 (-1.40%) $-1.26
Snowflake Stock Quote
$144.53 (1.16%) $1.66

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