Greg Abel Kicks Off Berkshire Hathaway’s Annual Meeting 5/1/26

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1:06On today's episode, we head to Omaha, where the Berkshire Hathaway annual meeting is just starting to get underway. Where is Becky Quick? Hello, everybody. I am here live at the Jazzwares booth, the maker of the Squishmallows. It is the first year in 60 that Warren Buffett will not lead the Berkshire Hathaway annual meeting. Berkshire's new CEO, Greg Abel, will take the stage. And some things will be different. But Abel says important things will stay the same. I just want them to really know that Warren brought this amazing commitment to Berkshire and deep understanding. And I want them to know that remains.

1:45In a sit-down interview with Becky before the crowds file in, he discusses this new chapter of Berkshire. Number one, very fortunate that Warren still comes into the office every day. And he's a great sounding boy. And longtime shareholder and Berkshire board director Chris Davis joins us. Nobody can communicate the way Warren can. What he's expecting from Greg Abel this weekend. I think people will be recognized that sort of gradual transition from sort of opining on the world to what do we own? What are the advantages? What's the durability of the businesses? Plus the stocks that get him excited as chairman of Davis Advisors.

2:25Capital One is a classic growth stock in disguise. I mean, imagine it's one of the largest banks in the country. It's still run by the founder. It's Friday, May 1st, and Squawk Pod begins right now. Stand, Andrew, bye. In three, two, one, cue, Andrew. Good morning and welcome to Spockbox right here on CNBC. I'm Andrew Ross-Dorkin along with Becky Quick in Omaha this morning. Becky, or I should say Joe, is off. But Becky, you've got a whole lot of things going on at what is still the Woodstock of capitalism. Yeah, that's right. There's a lot here in Omaha, Nebraska. It's Berkshire Hathaway's annual meeting.

3:05This time comes around very quickly once again, Andrew. It looks a lot like it has for the last two decades here, but it is going to be pretty different this time around, and that's because for the first time in 60 years, it's not going to be Warren Buffett taking the stage on Saturday. This time it's Berkshire's new CEO, Greg Abel. He'll be at the helm. He'll be answering questions. And the theme of this meeting is actually the legacy continues. That is what Greg Abel says he's committed to doing. Over 125 ,000 credentials were requested this year. That's about in line with what we saw in 2024.

3:37It is slightly down from last year, down by about 10 percent. Of those requests, some 30 ,000 to 40 ,000 shareholders are expected to make their way here for tomorrow's Q &A sessions and for the shareholder shopping. Of course, there's a lot of shopping to be had. Seize Candies brought 11 and a half tons of chocolate with it this time. That's a half ton more than they brought last year. Dairy Queen has over 26 ,000 frozen treats that they are waiting for people to snap up. Berks running is right here. It expects to see over 2 ,000 pairs of shoes. But there are a lot of questions that shareholders have as the company begins this new chapter.

4:13Berkshire has so many companies and we'll be speaking to the managers of lots of those companies, trying to get a feel for what this means right now, what the question for inflation is. We'll dig into a little bit more of that inflation question. We've got much more from Omaha throughout the morning. But for the moment, I will say, Andrew, you've been here a lot of times. You know what this place feels like. So far, it feels like the same sort of vibe, but we will see what happens when the doors open later today and when we actually start to see shareholders here as well. I'm imagining, I mean, we've talked about this, I think, Becky.

4:42I'm imagining that it's going to be like a reunion. I mean, it's become for so many people a reunion. I mean, a lot of people go there, obviously, to see Warren and Charlie for so many years. But to some degree, they go there to see each other. And I imagine that's one of the reasons that this is going to continue. I mean, people have built up friendships, but there is now, you know, conferences that shoulder this event. There's dinners and meals and all sorts of things. And so, you know, I know everybody has raised these questions about, you know, if Warren's not on the stage, what happens? But I don't know.

5:19We'll see. You and I have been talking about that off camera for a while. And I think you're right. I think that idea that you first pointed out to me, it's the camaraderie that comes with these long-term shareholders who have gotten to be friends and this has gotten to be something. And I know of several dinners that were already here last night. I know of a lot of breakfasts and different things that began even this morning. Other conferences, as you said, that are brought up around that. And for the moment, that definitely is the feel I get being here on the ground. Also, seeing how many tickets were requested.

5:52Now, some people request those tickets within Nebraska because you can use them to go get discounts at the Nebraska Furniture Mart and different things. But they also, if you are looking at the hotels, the hotels are pretty fully booked. The number of flights that are coming in on the airlines, pretty fully booked at that point, too. I know you couldn't get a car already if you were going to any of the car rental places over the last couple of days. So, you know, for the moment, it seems like it is business as usual. And those crowds, I anticipate, will certainly be here this weekend. The Woodstock of capitalism, it continues.

6:31Joining us this morning here from the Berkshire Hathaway annual meeting is Chris Davis. He is the chairman of Davis Advisors, which has more than$31 billion in assets under management. He's also a director here at Berkshire. He's a director at Coca-Cola and oh, and Graham Holdings, also another director on that board as well. Chris, I've known you for, I think, 15 years or something. I've never gotten the chance to interview you here from the Berkshire Hathaway annual meeting. So I'm excited about this. I really want to get your perspective as a Berkshire director, but as somebody who's been coming to the Berkshire Hathaway annual meeting for what, more than 35 years at this point?

7:07Yeah. Yeah. So a longtime Berkshire follower and a kind of a loyal Berkshire visitor to this event. This is the first time in 60 years that someone other than Warren Buffett is going to be taking the stage and answering shareholder questions. What do you expect? What do you anticipate? What do you want to see? Well, I think nobody can communicate the way Warren can. And so I think there's probably will pivot more towards information, substance about the businesses. And I think people will be recognized that sort of gradual transition from sort of opining on the world to what do we own? What is what is the what are the advantages?

7:51What's the durability of the businesses? How are they performing? And that is just Greg's wheelhouse. He's just a fabulous operator. Berkshire shares have underperformed the S &P 500. What do you think about the shape of the businesses right now? What do you want to hear? I mean, you probably know all of these things, but if you're the average shareholders who's sitting in the audience, what would you like to hear? Well, I would just say over what time period? I mean, the S &P 500 is such a peculiar distortion right now. You know, we sat out here in 1999 and everybody said, you know, Berkshire's dead, value's dead.

8:23He's a dinosaur. Why doesn't he just index? And, you know, you get these sort of cycles. And we've been in a super cycle where the index valuation has gone higher and higher. The number of contributors has gotten narrower and narrower. So we're in a very distorted environment. I would give it some time to play out. OK. You are somebody who considers yourself a value investor, but I think a value investor who's also looking for growth along the way with this. I'm very interested in one of the storylines you've been pursuing in stocks, and that's the financials. We've been in this MAG-7 environment for so long.

9:00You're looking at the financials as the new mega caps for some of these reasons. Explain that. Well, I think that financials have this characteristic of where you get enormous sort of durability in the business model. And they're businesses where culture can be a defining business over a defining advantage over a long period of time. And I think what's happened is the financial crisis created the sense that financials are very fragile. And so capital ratios have been built. Regulation has been added, just like happened after the crash and the depression in the 30s. So you now have very durable businesses that are well capitalized and yet people still trade them as if they're very fragile.

9:41So I think that what will happen over the next decade is people will come to recognize that this is misunderstood durability and that they, in a sense, have the ability to grow their dividends for decades. And I think they'll go from being perceived as fragile to being perceived as boring. And I think that that's a very useful transition because, as you know, utilities trade at about 20 times earnings. You know, lots of boring companies trade at these high valuations because people trust that they're not fragile. I think that's sort of what's in front for financials. Within that, you like Capital One in particular.

10:18I think you called this the original fintech stock. Yeah, well, Capital One is a classic growth stock in disguise. I mean, imagine it's one of the largest banks in the country. It's still run by the founder, right? Alexander Hamilton's not running the Bank of New York. And Mr. Wells and Mr. Fargo have moved on to greener pastures. But here you still have Rich Fairbank running Capital One. And absolutely, it was run from the beginning as a data science company, as a fintech company. It didn't have any branches. It didn't have any brands. It built one of the great, great companies with this unique culture that is really data driven.

10:56And I don't know any company that is better positioned for the advent of AI and in financial services than Capital One. And it trades at nine times earnings. I mean, it's just amazing to me to have those sorts of opportunities in a very expensive market. Chris, one of the things I love about you is you are opinionated and you don't mind sharing those opinions with people. I know recently you had some pretty strong things to say about the private equity markets getting retail investors kind of built into their business and having that lockup period for a long time. What's wrong with that? First of all, how do you feel about it overall?

11:35Well, you know, Bill Ruane was one of the great people I've known. And he had a saying where he said, you know, first come the innovators, then the imitators and then the swarming incompetence. And this happens all the time in financial services where, you know, there's some innovation, there's some new way of doing things, and you get really smart people achieving great results. And then people that attracts attention and money starts buying in and all of a sudden it becomes a sales game. And in the end, it is just an asset gathering. And usually it's the retail investor that gets left holding the bag.

12:12This happened with oil and gas partnerships in the 80s. You know, it's just sort of the last up with all the crappy IPOs in the late 90s. They stick them into the widows and orphans. And I really see that in private equity. You had wonderful, incredibly well-run innovators that created that industry. And the industry has grown and grown and grown until really it's just they just sort of passed the potato one company to another. I was actually talking to a young relative of mine who works at quite a well-regarded private equity firm. And he just is getting his first deal in the portfolio. And I said, what is it?

12:52He said, you know, it's this weird sort of housewares company. And he said, we're the third owner in private equity. I think the juice is out of that lemon. And they just add more leverage. And so what's happened is liquidity is drying up. Less money is coming in there. So what are they doing? Let's try to stick it to the retail investors. And I think that is really disgraceful. I think you have people with their life savings being put into products that really are to allow exits for the more sophisticated investors. So I think it's a terrible idea. And I think liquidity is mispriced today. I think people should want to be able to change their minds.

13:31Let me ask you about one more thing I know you're kind of fired up about today. And that is an activist investor going after Merkel, which is a company that your grandfather invested in. And you've known very well for, what, 40 years at this point? Yeah, we've been invested in Merkel since it came public. And in fact, I met the now CEO when he was still a crank in the investment department because we were sitting next to each other at the Orpheum Theater in Omaha 35 years ago at a Berkshire Hathaway annual meeting in like 1991. 1991. And what was clear was this was a company that had this profound sense of integrity and was studying Berkshire and studying the idea of what it made Berkshire what it is and come to the conclusion there are no shortcuts.

14:18There are lots of imitators of Berkshire, but they wanted to build a company with insurance as their base, which they had, but recognize that they should have these three legs of the stool, investing wholly owned businesses and insurance. And this this activist investor comes in and says, oh, it should be split up. And it's really, again, the innovators in the beginning, there was a useful role for activists that has just become an asset gathering industry. I think it's outrageous that corporate pension plants, for example, are even invested with these sorts of funds. They are they are actually a cancer in the in the corporate governance business, because what they really are is short term investors.

14:59And I saw an activist get into Texas Instruments that's been incredibly well run for 25 years, but makes long term investments. And they get in there and say, no, stop that. And, you know, just dividend out the money. And going in and proposing to split up Markel is really one of the stupidest suggestions that I've seen made in the last 10 or 20 years. That is a record of shareholder integrity, of long term performance of something built to last. And these guys are just trying to get a short term pop by selling off businesses with real workers that have created real value for shareholders. Chris, I think you might be able to fill Charlie's seat on the stage in terms of making sure there's a more authority and somebody who says exactly what they think about things here.

15:45One of the great advantages of age, you stop caring what other people think. What did your daughter say to you yesterday? She said, I've run out of something, you know, but it may have been filters. You have zero somethings. Well, we love that. And it's great to see you here. Thank you so much for taking the time today. Thank you so much, Becky. I'm glad to be here. Cheese will be next. Coming up on Squawk Pod. Hi, Victoria. How are you? Good to see you. Nice to see you. Thank you for what you do. Becky sits down with Greg Abel, the first new face leading Berkshire's annual meeting after 60 years of Warren Buffett.

16:23Greg Abel is in it for the long haul, too. My runway's really long. I love doing this. And what Berkshire's many, many companies tell him about the inflation picture. It's all manageable at this level, but we all know what's happened to countries at the extreme levels. And post-COVID, we hit some pretty high levels. When we're at that 8 % to 9 % level, that's pretty alarming. And it adjusted down. So if it gets the levels and then it continues to compound, it gets very scary. Berkshire Hathaway's new CEO kicking off the 61st annual meeting right after this.

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18:16Honor their courage. Get my men onto the beaches somehow, anyhow. See their story. We will accept nothing less than full victory. Pressure, the untold true story of D-Day. Rated PG-13. May be inappropriate for children under 13. Now playing only in theaters. Welcome back to Squawk Pod from CNBC. Here's Becky Quick. Greg, first of all, thank you for having us here at what is the first meeting of the New Berkshire. first time in 60 years that they have a new CEO who's heading up this meeting. What is this like for you? You've been doing this for so long, but what is this like for you this first time out?

18:55Well, thank you for being here. And we're so excited to be here in Omaha. So it is a great tradition. And yes, first time in 60 years. Fortunately, Warren will be a part of it. And we're excited by that. And what I really want to communicate to, we have our owners here. and these couple days are especially on Saturday it's owner's day it's their day so I just want them to really know that Warren Warren brought this amazing commitment to Berkshire and deep understanding and and I want them to know that remains that there's a team myself included that are absolutely committed and have a deep understanding of Berkshire and we bring that same passion every day.

19:40What's going to be different at the meeting this year? Anything? There's some just evolution as I think hopefully our owner shareholders enjoy. So one of the things we'll be doing is introducing some other managers. And that was very purposeful because when you walk around here and all these businesses, we have exceptional leadership in the businesses and we very much operate at where this ownership mentality. It's their businesses. But what we want is to, on stage, let all the owners, all the shareholders, those watching CNBC, start to see the depth of management in Berkshire. How did you pick the managers?

20:21And I understand Adam, because he's obviously in this new management role. Katie Farmer is going to be on stage too. What made you get to those people that you'd be bringing up? So it started with the thought that on the insurance side, we have Ajit. Yep. But even even Sunday, we'll we'll add an insurance manager and things like that, because the idea was if you think of start with insurance, there's no one better than Najee and and the world needs to hear him and see him. But equally, we have a deep team there. And that's something I've been so excited by. When Warren made the announcement last May, as we all know, the first thing he did was pull together the senior team, the senior leaders on the insurance side.

21:03And it was a small meeting in Omaha, Warren, I, Ajit, and say five other of the senior leaders in insurance. But Warren was very open about, okay, this is our new team. I was the first guy. I've got a lot to understand and learn. I had some knowledge from spending a lot of time with Ajit and being on certain boards. But that was really exciting. And to see the depth of that team was just, it felt really good to know who was behind Ajit. And then so I had that opportunity. And then when it came time on the non-insurance, really focused on one Adam. And as much in that he brings a wealth of experience from NetJets.

21:46And he's remaining our CEO there because we still want him to have his fingerprints on it. But he's got an exceptional team. But as he took on the 32 teams, as you've already highlighted, that was a logical outcome. Katie is our largest non-insurance business. So it was logical to introduce her. She runs an amazing business, 175 trains moving a day across 32 ,000 miles, 32 ,500 operationally, and serving many, many different types of customers from agriculture to moving the intermodal traffic we do. So she's got a breadth of responsibilities, and I just wanted our shareholders to meet them and hear what they do every day.

22:35I know it's right ahead of earnings, so you're in a quiet period. There's some things you can't say. But how has the war in the Middle East, higher energy prices, impacted the company? How do you deal with it? Yeah. I mean, fortunately, we do have a team and teams. it can be a variety of things that surface daily, quarterly, in an annual basis. Always very proud of them. I mean, it's heads down and we're going to work our way through this. So you're right with energy costs going up. For example, if you think of our chemical businesses, we have LuRizal. We just completed the OxyChem transaction on January 2nd.

23:17We closed that. And then we have a third one called LSPI. and I like to think of them as our chemical group, their inputs went up immediately. Now, that takes time for us to catch up on pricing because we have customer contracts and they do reset and it's a bounce. And on the back end, they'll be a little slower to correct. So there's a way to adjust for price appropriately and fairly for both the customer and us. But that takes time. So I would say the biggest thing is we see some immediate increase in the input costs across certain businesses. Okay. Back to Adam. You know, people wonder who your sounding board is.

23:59Warren had Charlie. Warren had you. Who do you get to talk to to kind of bounce ideas off of or be a steadying force when you get questions yourself? Yeah. So, number one, very fortunate that Warren still comes into the office every day. And he's a great sounding board. I mean, that's really, there's a lot of collaboration now. And there's always been, but I'm going to call them or I'm in Omaha a few days a week. And then I'm on the road like I've always been meeting with our other businesses or looking at certain opportunities. But when I'm here, it's a discussion around what we're seeing, him and I.

24:39How do things feel? What do I see as opportunities? What's he seeing as an opportunity? opportunity and so one exceptional sounding board there's no question I talked to Adam not just about his businesses but what are we seeing again where are potential opportunities and I've really tried to have that type of engagement for a number of years with our non-insurance operations but if you go to our top businesses they're very senior business leaders in themselves. And I greatly value hearing what they're seeing. What are they hearing from their suppliers? What are they hearing from their customers?

25:17Because it has a, so it's just gaining, gathering that knowledge is sort of on a continual basis from a broader breadth than say just a Charlie, but that would be, I'm fortunate to have that broader group. You wrote in the annual letter, which by the way, was really comprehensive, had a ton of information, I think, updating people about where things stand as the company, what you would want to know if you're an owner in the company. But you wrote in it that your job is primarily one of risk management to kind of see around corners. How do you do that? Because when I think risk management, I always think Jamie Dimon or somebody who's really involved with the financials.