Berkshire Hathaway (NYSE:BRKa). vice chairman Greg Abel, and likely successor to billionaire Warren Buffet, said on Monday he bought 168 class A shares in the company last week at $405,800 and $408,514.01 per share for around US$70mln.
His holdings pale in comparison to Buffett's Berkshire investment and Reuters Breakingviews said the purchase "doesn’t quite live up to the Buffett standard."
"To be fair, Abel isn’t – and may never be – quite as rich as Buffett. In June, however, Berkshire bought Abel’s stake in its energy subsidiary for $870 million in cash. A Buffett-like move might have been to plough all that cash he netted back into the company’s shares. Instead, Abel has spent just a sliver" it commented.
The legendary investor, who has been Berkshire's Chairman and CEO for decades, holds 229,016 A shares and 276 B shares to give him control of more than 30% of Berkshire’s voting stock.
He has been gradually giving his shares away to five foundations, with most of his donations going to the Bill and Melinda Gates Foundation.
Abel already oversees all of Berkshire's noninsurance businesses, and Buffett has said that he will one day take over as CEO as part of the company's succession plan. However, the 92-year-old Buffett says he has no plans to retire.
Investors will no doubt be encouraged to see Abel buying some Berkshire shares, but this summer he sold back to the company for $870mln his stake in Berkshire's Iowa-based utility division that he used to lead.
So even after these recent purchases of Berkshire stock, he has a significantly smaller investment in Berkshire than he used to.
Edward Jones analyst Jim Shanahan said he's glad to see Abel investing in Berkshire shares because it "demonstrates his alignment with shareholders."
But he said it's a relatively small investment given Abel's wealth and compared to his previous stake in Berkshire Hathaway Energy.