Warren Buffett’s potential departure as CEO of Berkshire Hathaway has raised concerns about the company’s vulnerability to activist investors. Chris Davis, a member of Berkshire Hathaway’s board, has cautioned that once Buffett exits, the company might face pressure from activist investors.
Buffett, who is 93 years old, is nearing the end of his tenure as CEO following the passing of his right-hand man, Charlie Munger. Davis acknowledged Buffett and Munger’s dedication to their shareholders, describing them as “the greatest stewards almost in the history of capitalism.” However, he anticipates that after their departure, there may be an influx of shareholder proposals aimed at short-term value, potentially undermining the company’s long-term value.
Berkshire Hathaway has been structured as a collection of independent subsidiaries, allowing Buffett and Munger to focus on capital allocation while delegating daily management to different CEOs. Critics argue that this structure may be less efficient, which could lead to calls for changes within the company.
Davis emphasized the board’s role in maintaining Berkshire Hathaway’s culture and urged directors to stay focused on the long term. The demise of Charlie Munger and the anticipated departure of Warren Buffett mark a significant transition for the company. Together, they have built Berkshire Hathaway into a massive holding company with a market capitalization exceeding $791 billion.
In response to Munger’s death, the Daily Journal Corp. expressed concerns about future returns, stating that it is “impossible to ever replace” Buffett’s investment partner. The anticipated pressure from activist investors could potentially lead to a shift in Berkshire Hathaway’s structure and operations, which will undoubtedly shape the company’s future.
As Berkshire Hathaway navigates these challenges, its ability to adapt and maintain its long-term focus will be crucial. The company’s shareholders and the broader market will closely watch how the company responds to potential activist investor pressure and any changes that may arise in the post-Buffett era.
