Incoming Berkshire Hathaway chief executive Greg Abel is reportedly reshaping the business’s leadership team ahead of his January takeover, following the departure of two key figures.
Todd Combs, one of the firm’s two investment managers alongside Warren Buffett and former Geico CEO, is leaving to join JP Morgan.
Mr Combs will take on a role advising JP Morgan CEO Jamie Dimon on how to invest $10 billion, serving as a special advisor.
Concurrently, longtime Chief Financial Officer Mac Hamburg is retiring after four decades with the company.
Mr Combs’ exit is considered the most significant development in the announcement, which also included the creation of new positions such as general counsel and a manager for Berkshire’s extensive retail and consumer businesses.
The changes now raise questions about the future of other senior executives, including insurance Vice Chairman Ajit Jain and investment manager Ted Weschler, as well as the CEOs of Berkshire’s numerous subsidiaries.
“There’s still two elephants in the room: what’s Ajit Jain going to do and what is Ted Weschler gonna do?” CFRA Research analyst Cathy Seifert said.
Geico’s Chief Operating Officer Nancy Pierce was promoted to CEO, but Berkshire didn’t offer any details about how Abel will handle the company’s stock portfolio that’s worth more than $300 billion.
Buffett said last year that Abel will ultimately be responsible for picking stocks as well as trying to find acquisitions and deciding where to reinvest in Berkshire’s dozens of businesses while managing all of those companies. But Abel has never been a stock investor, so the plan was for Combs and Weschler to help manage the portfolio.
But Dimon’s move to hire Combs away from Berkshire and off of JP Morgan’s board where he had served for nine years prevented that from happening. “Todd Combs is one of the greatest investors and leaders I’ve known, having successfully managed investments alongside the most respected and successful long-term investor of our time, Warren Buffett,” Dimon said.
Keefe, Bruyette and Woods analyst Meyer Shields, who has followed Berkshire for more than a decade, said he expects more turnover in the months ahead as Buffett relinquishes the CEO job he has held for more than six decades. Buffett will remain chairman, but Shields said “we expect more turnover in coming months, since the cachet of working for Mr. Buffett’s successor is not (at least yet) the same as working for Mr. Buffett himself.”
Most of those coming departures may not generate headlines, but Shields said he expects a number of the CEOs of Berkshire subsidiaries who have been working long past a typical retirement age will depart now that they are no longer able to work for Buffett.
But CEOs who have been reporting to Abel for several years have said they have been impressed with the business acumen he has demonstrated while overseeing businesses as varied as Dairy Queen, Brooks running shoes, Iscar Metalworking, Marmon Holdings and Helzberg Diamonds. Buffett has said that Abel might be able to get more out of all Berkshire’s businesses that he has because Abel is more hands on.
But in an acknowledgment of the fact that he will have less time available when he becomes CEO, Abel promoted NetJets CEO Adam Johnson to a new role overseeing all of Berkshire’s consumer, service and retail businesses. Abel will continue to oversee all the manufacturing, utility and industrial businesses, including BNSF railroad and Berkshire Hathaway Energy.
Shields said he doesn’t expect a huge change in direction or see Berkshire split up under Abel, but he’s impressed that he’s willing to depart from the way Buffett has always run things and implement a more typical corporate structure.
