This Canadian could one day be Warren Buffett’s successor

Yahoo Finance Canada

Warren Buffett may be America’s best-known investor, but when the 87-year-old billionaire eventually decides to step aside from the perch atop his Berkshire Hathaway holding company, the smart money says a Canadian will take his place.

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Buffett’s succession plan has been a hot-button issue for a while now. The discussion came to the forefront again on Wednesday when both Greg Abel and Ajit Jain were added to the Berkshire Hathaway board and promoted to vice chairman positions, cementing both as frontrunners for replacing Buffett when the time comes.

It’s a natural question for a corporate leader getting further and further past normal retirement age. But of course, this isn’t just some old guy in a corner office who can be replaced by some MBA with a good resume. This is an investment guru whose wealth is measured in the tens of billions, who has done his time atop the richest-in-the-world lists, and a guy who has a cult following possibly unmatched in the business world.

So, these are big shoes to fill.

Let’s hope Abel has big feet. He’s not a household name at the moment, and in fact he’s not even the most famous Abel in his family. That would be his late cousin Sid Abel, he of the Gordie Howe-era Detroit Red Wings (and it wouldn’t be a real Canadian-makes-good story without a hockey connection).

But his name recognition could jump if the current tea leaves around Buffet’s succession are being read right.

Abel, who is currently chairman and CEO of Berkshire Hathaway’s fast-growing energy business, will now take on the role of vice chairman for non-insurance business operations. He saw his position on the shortlist first strengthened in 2015 when Berkshire vice chairman Charlie Munger singled out both Abel and Jain as potential candidates to take over for Buffett. Jain runs Berkshire’s biggest insurance business, and will take on the role of vice chairman for insurance operations.

Jeffrey Matthews, author of “Warren Buffet’s Successor: Who It Is and Why It Matters,” told Yahoo Canada Finance he thinks Abel has moved past Jain to the top contender position.

“Jain… was my previous number 1, given his history of understanding risk,” says Matthews.

“But Jain is older and Buffett … gave him oversight of General Reinsurance, which might make him “the insurance guy” for Berkshire after Buffett’s gone, leaving Abel the CEO.”

At 55, Abel is also a full decade younger than Jain, which some feel gives him an edge in a company where the CEO would be expected to have a long tenure.

Born in Edmonton and educated in finance at the University of Alberta, Abel joined Berkshire Hathaway when it acquired MidAmerican Energy in 2000, and quickly helped build the unit into a powerhouse of the U.S. energy sector.

In 2008, he took over as CEO of the energy unit, and has since been given the green light by Buffett to deploy billions to make acquisitions.

“He’s a money-maker, which you’d have to be to replace Buffett, and a builder, which Berkshire needs to keep growing, as well as a deal-maker, which will always be important to Berkshire given it’s huge cash flows,” says Matthews.

Of course, nobody can really replace Buffett. And in fact, when the “Oracle of Omaha” does step down, he’s expected to leave many of the investment decisions to a handpicked Chief Investment Officer, leaving the next CEO to focus on management and growth.

This would seem to be a fit for Abel, who has led a series of acquisitions in the Berkshire energy group, including adding to its Canadian content with deals such as the $3.1 billion purchase of Alberta electricity distributor AltaLink in 2014.

Berkshire Hathaway Energy now holds a sprawling empire of electric and natural gas utilities, transmission companies, and a growing number of renewable energy players. All told, it contributes about $2 billion a year to Berkshire’s profit.

Abel hasn’t spoken publicly on the topic, and in fact tries hard to avoid the spotlight, in contrast to Buffett, who is one of the public faces of American capitalism and spends hours on stage taking questions at Berkshire’s annual meetings.

If Abel does eventually slide into the captain’s chair, it will be a major shift for Berkshire’s cult following.

But that would be the case no matter who replaces Buffett. Indeed, maybe the $500 billion Berkshire behemoth doesn’t need a celebrity in the future, but instead a smart manager who won’t make mistakes and will fit in with the Berkshire Hathaway culture.

“He’s smart, he’s a good deal-maker, and he’s ethical,” says Matthews.

This story originally appeared April 2016. Updated January 2018.

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