Buffett Steps Down as Berkshire Chair, Ending Six-Decade Run

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1:39Scarlet Fu:Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. Paul, you mentioned the big news over at Berkshire Hathaway. Warren Buffett stepping down as the chairman. He had already stepped down as CEO. So this was kind of the last senior role he held before he really moves into retirement at this point. Matthew Palazzola covers insurance companies. He's our senior analyst on PNC Insurance here at Bloomberg Intelligence.

2:20Scarlet Fu:Matthew, this is more symbolic than practical. Does this change anything for Berkshire Hathaway? Yeah, I think that's a good read on it. I think Buffett had said this a couple of years ago. He said, I care more about the Berkshire after I'm gone than the Berkshire while I'm here. So I think you're seeing a lot of what he's doing in that vein, right? This this slow transition to Greg Abel, the stepping in as chairman. And I think, quite frankly, and he's been blunt about his mortality. I don't think he wanted to die in the chair as chairman. Right. And for what that would mean for the company. So he's 96.

2:59He's walking with a cane. I think he just said, you know, it's the time for me to to move away. And the plan has already been in place. So let's implement it. How much is investable cash on the balance sheet now? A little north of$320 billion, I believe. That's what I was going to go with. North of$300. I don't know what you do with that kind of money. The day after Mr. Buffett passes away, Greg Abel, will he change, I don't know, how they think about deploying that capital, whether it's being more aggressive, strategic acquisitions, returning to shareholders, some kind of plan to do that? How do you see that happening?

3:37Yeah, I think so. Buffett's son is going to be the chairman. Right. So I think part of that is keeping the ethos of Berkshire in place. So you mentioned returning to shareholders. I think that's probably not in the cards anytime soon, even while even after Buffett would be gone. uh abel has come out and said he's not really a big fan of berkshire paying a dividend uh i think over the long term they may they may decide to do something abel's been fairly aggressive deploying capital it's just they have so much of it that it doesn't make that much of a dent i just kind of did the bio on howard buffett gentleman's 71 years old you know right you know it's he's not going to be there forever yeah it's interesting i mean you just and because warren's 96.

4:27So Howard been on the board for 33 years. So it's not like he hasn't been part of this company. It's been on other boards. He was on the board of Coke. Buffett did say bluntly again, Howard's number one criteria for being the chairman was being Warren's son. So, you know, he didn't kind of mince words with that. And I think all of that is keeping with the spirit of Berkshire. Greg Abel is going to run the company. Howard Buffett's not going to make operational decisions. But Greg Abel will be in charge.

4:58Scarlet Fu:Greg Abel, 64 years old, so younger than the son. But I'm looking at the age of the board and they're all in their 70s, it looks like. I mean, you've got a couple of people in their 60s. Chris Davis is 61 years old. He looks like he's the youngest guy. Do you expect any kind of change in the board makeup at some point? Because as we're saying, Warren Buffett's son, Howard, is kind of getting up there. And Greg Abel, if he wants to be able to kind of have some room to do stuff, you know, he needs the blessing of the board. I think so. I think perhaps over time, I mean, to be totally honest, I don't have a ton of visibility into the bench of the board.

5:34That's fair. But I would see, you know, everyone getting on in age. You see a G Jane who is in charge of the insurance operation selling a lot of his shares. He's 75. Yeah. So he's been selling down shares. So there will be a change of the guard. I would expect, though, everything to be gradual as it's been. And the lead director is Sue Decker, who I know. She was a sell-side research analyst at DLJ, and we acquired DLJ at Credit Suisse. Super talented woman and has had a great career, so she's the lead director there. All right, let's—enough, because every time we bring you in here, we talk about Warren Buffet.

6:11Let's talk about property and casualty stocks. What's the number one theme for you and your investors in insurance stocks? Yeah, I think so. Going into the year, I was more negative on the stocks. ROEs looked like they were on a downward trajectory. The underwriting results have been better than expected, and potentially interest rates being higher for longer are good things for property casualty insurance stocks, particularly within financials. It's not spread business. They just do better from higher interest rates, so moderately more positive on the group through the year.

6:46Scarlet Fu:So it's just a better operating and investing environment for them. Better investing environment and the operating environment not gotten as bad as I thought it would get. And we've also had a very mild hurricane season. How much pricing power do they have going forward, given where inflation is and how stretched consumers feel right now? So on the primary insurance side, prices go up, down 10 % is probably the most. I mean, it's an inelastic business. People have to buy the product. So they have pricing power, but it's also a cyclical business. So prices have been going down, and we expect them kind of maybe to flatten over time.

7:24Scarlet Fu:How much switching around between different insurance carriers is there actually? I mean, people talk about it like they want to do it, but it takes a lot of effort. On the personal line side, so in home and auto, there's a lot more, and those companies are seeing that. On the commercial line side, which would be like Chubb and Travelers, they have big commercial businesses. probably not as much shopping, but on the personal lines, I'm sure your senior rates go up and that leads to people shopping their insurance. Stay with us. More from Bloomberg Intelligence coming up after this. This is the Bloomberg Tech Minute brought to you by ChatGPT.

8:00Scarlet Fu:Now with ChatGPT work. I'm Carol Masser. AI is creating a new path for musical stardom. As Bloomberg's Lucas Shaw and Ashley Carman Report, Suno, an AI-generated music company, lets users generate a song in any style based on a text prompt. People can upload their own lyrics or start from scratch, record their own voices, or rely on ones provided by Suno. While most of the songs generated on the service go unheard of by the masses, a few have taken off, including a recent TikTok trend that involves users uploading text messages to Suno and turning them into musical performances, like taking the texts from a crazy night out and making it a gospel song.

8:40Scarlet Fu:Suno's pitch to investors is that it'll democratize music creation, leading to a more than$5 billion valuation for the company. The music industry, it's watching, as its biggest concern about AI is whether record labels, rights holders, and artists will be compensated for the work they claim built the training models for companies like Suno. Another question, will these AI bangers have any staying power or just be one-hit wonders? That's the Bloomberg Tech Minute brought to you by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com today by selecting Work Mode.

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10:53Scarlet Fu:You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. This is one of the most read stories on the Bloomberg Terminal today. And I knew that she was working on this for a couple of weeks because she told me about it. Janet Lauren is our Bloomberg higher ed finance reporter here at Bloomberg. And Janet, you write about football suites in Kansas for$860 ,000 and how the food that's available, crab cakes, smoked ribs, cobb salad, macaroons, there's beer, there's wine, there's all kinds of fancy alcohol.

11:36Scarlet Fu:Can we just get a hot dog and a beer? No? Probably. This is college football. These are college football stadiums. These are not professional football stadiums. Yep. They look pretty professional, though. And this all has to do with the new era of college sports and the fact that we now have college players getting paid like professionals. Tell us a little bit more about your reporting. So, yes, colleges are now paying players. And because of that, they're looking for revenue everywhere they can get it. And one way they see revenue is through stadiums. They're taking a page from professional sports and they see that their people are willing to pay a lot of money for these tickets, experiences, fancy food, fancy sweets, fancy everything.

12:21And your story, it's not you didn't go to like University of Alabama or Penn State or Ohio State. went to Kansas. Kansas is hoops. They're not football. But even Kansas, to stay competitive, is making huge upgrades to fund, as you said, the new economics of big time college sports, which is you got to pay for these players now. Exactly. And Kansas had somebody to lean on, a really prominent alumnus named David Booth, who was here a couple weeks ago. he worked in the stadium as a teenager. And he, you know, he'd also spent a lot of money to help basketball. He bought like something related to Naismith or Kansas.

13:05And they asked him, can you help us with this stadium? And he said, you know, look, we can build, you know, more suites. We can help the team. And he said it wasn't really a hard sell. And he's 79, probably thinking about what to do with all of his money. And there you go. And he gave money to the University of Chicago Business School, which is now the Booth School of Business.

13:26Scarlet Fu:That's right. So that Booth name is pretty prominent among Wall Street folks. There's also some legislation, Janet, you say, that could also supercharge this kind of spending. Tell us a little bit more about this Protect College Sports Act. So the Protect College Sports Act is moving its way through the Senate. It had cleared some hurdles this week. The main sponsor is Ted Cruz, and he has a bipartisan co-sponsor, Maria Cantwell. And the bill would put some guardrails on college sports. Most notably, people are most upset about the transfer portal because students are leaving after one year, and they're basically free agents.

14:09They could go to the next college for a bigger NIL deal. So if you look at Indiana, the team was constructed with transfer students. They won football for the first time ever. Michigan, entire team in basketball constructed with transfers, and they won. And their coach left to go to the pros because what a headache to have to start over all again.

14:35Scarlet Fu:Yeah, from scratch. So this bill would put some guardrails, limiting transfers, and then also create a retention fund to help pay players to sort of give them an incentive to stay. So that's one of the biggest. Not surprisingly, the players don't love that idea because they would like to do whatever they want. But very different from professional sports where you have a contract. So what's happened? And I mean, the sport's gotten way ahead of any kind of legislation, any kind of controls. And so we're just trying to catch up here. And this bill sounds like it might be a good first step. But the reality is just even in the Big Ten football, schools like Rutgers, University of Maryland, they can't compete even remotely with Ohio State, Penn State, Michigan, just from a budget perspective.

15:26It's simple money. And even in these big power conferences, there's two or three schools that dominate. Kind of like the L.A. Dodgers. And everybody else. And so the question, I think the NCAA should be asking is, is this the structure we want?

15:42Scarlet Fu:Well, that's the other question. Where is the NCAA in this? Do they even play a role or are their hands kind of up in the air because now we're in the era of paying players? Yeah, they don't really have an official role, but they have done some things like approved a jersey patch. They did that earlier this year. So now schools could sell a jersey patch, but not during the March Madness. Those are such small dollar signs. No, but some of these deals are not insignificant. Like JPM signed a deal with Ohio State for like$17 million a year. And when you're trying to add in a lot of deals to get to that$50 million, they're thrilled for everything.

16:22Lots of logos on the courts, on the fields now. It's like a European football club. Yeah, it's the Wild West out there, and it's really bad. And I think if for those people that appreciate what's special about college athletics, it's really bad.

16:38Scarlet Fu:Do we get a national sports star in this country? No, you know, everybody, I just said, Coach Saban, let's just get him in there. Coach K, I don't know, somebody get in there and just kind of put some reasonableness into it. Stay with us. More from Bloomberg Intelligence coming up after this.

16:54Scarlet Fu:This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT work. I'm Carol Masser. AI is creating a new path for musical stardom. As Bloomberg's Lucas Shaw and Ashley Carman report, Suno, an AI-generated music company, lets users generate a song in any style based on a text prompt. People can upload their own lyrics or start from scratch, record their own voices, or rely on ones provided by Suno. While most of the songs generated on the service go unheard of by the masses, a few have taken off, including a recent TikTok trend that involves users uploading text messages to Suno and turning them into musical performances, like taking the text from a crazy night out and making it a gospel song.

17:38Scarlet Fu:Suno's pitch to investors is that it'll democratize music creation, leading to a more than$5 billion valuation for the company. The music industry, it's watching, as its biggest concern about AI is whether record labels, rights holders, and artists will be compensated for the work they claim built the training models for companies like Suno. Another question, will these AI bangers have any staying power or just be one-hit wonders? That's the Bloomberg Tech Minute brought to you by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects. Get started at chatgpt.com today by selecting work mode, available on Plus and Pro plans.

18:18You already know how AI is changing how everyday work gets done, how much ground you can cover and how fast a team can scale. To stay ahead, you need the tools that give you a competitive advantage, built for this new era. Welcome to Agentic Revenue. Adio is the CRM for this world. It meets you where you work, compounds every customer signal into context, then acts on it across your pipeline to let you move at unmatched speed and scale. With agents and automations for every job in revenue, Adio orchestrates your work around the clock. Built to handle the scale of your workloads, extensible with API and MCP, and with the infrastructure to keep up with your most ambitious agents.

18:55Loved by high-growth startups like Granola, Modal, and Etched, Adio runs the work behind everyone. That's Adio, the agentic CRM, the intelligent system that never sleeps. Picks up leads at 2 a.m., catches renewals before they slip, hands you the answer before you ask. Try Adio free at adio.com slash iHeart. That's adio.com slash iHeart.

19:44www.bloomberg.com slash tech London.

19:52Scarlet Fu:This is Bloomberg Intelligence with Scarlett Foo and Paul Sweeney on Bloomberg Radio. OK, it is Friday, which means it's time to bring in Randall Williams. He's our business of sports senior reporter. And there's so many stories to follow here today and this week. I want to start with the one that's on our top worldwide page, which is Kille Mbappé, the French soccer star, football star, has decided on a brand, and he is going with On, the Swiss sneaker maker, not Nike. This is kind of huge. Yeah. The biggest takeaway that I have is that you normally don't see athletes in their prime leave Nike.

20:28Sometimes they leave it in their post-career. But, of course, there have been some examples. Simone Biles, Roger Federer, Steph Curry in 2013, I believe. Allison Felix, of course. But this is like Mbappe. I think Mbappe and I are the same age. And he still has a lot of playing days left. I think he'll, you know. So do you. I still have a long way ahead. Not on the pitch, but he has at least two more World Cups left on the center stage. And so with that in mind, I think it's a big blow to Nike in their soccer business. Now, they have tons of athletes, but in soccer, it's huge. It's just economics, right?

21:02Whoever writes me the biggest check, that's basically what it is. Well, he's getting equity in On, and that's part of it. I think that it's a big bet for Mbappe because whenever an athlete accepts equity, you assume that the company is going to do well. and on has done well. Of course, their first big bet was with Roger Federer. That's paid off, and now they've made a second splash. All right.

21:20Scarlet Fu:Is he going to be super involved the way that Steph Curry was involved at Under Armour? Well, also, I believe their director of football is Thierry Henry, who was Mbappe before Mbappe, a French superstar who played. Wasn't he a commentator? He is. He's hilarious. And I think that level of trust of having somebody that you know that's from your country will certainly help things. His involvement, I think we'll see. I think we'll find out more as he sports the apparel and how much you see an athlete. Because normally, if an athlete is super excited about something, then they won't stop talking about it.

21:51They'll do as many advertisements as needed. And social. It's all about the social. Yes, yes, yes. That's how you roll. All right. The king of New York, and of course, I refer to New York Knicks all-star Jalen Brunson, is in news this week. I guess he and his family are starting up some type of brand agency? Yes, it is called 33rd Management Group. Because Jalen Brunson was drafted 33rd, I believe, by the Dallas Mavericks. I thought it was because the garden's at 33rd Street. And he's the owner of the garden? Yeah, pretty much. It's a good theory. It's a good theory. I hadn't thought of that one.

22:23But he, his mother, and his sister are launching this firm. And the first clients, of course, are himself and his wife. And they're also looking into philanthropies, into brands, into college athletes and women in sports. And so I think it'll be really interesting to see how they attack this.