Buffett hands over the countdown to Abel: After the halo fades, Berkshire (BRK.A.US) faces dividend calls and acquisition challenges.

Warren Buffett has been the embodiment of Berkshire Hathaway (BRK.A.US) for sixty years. He transformed a failing textile factory into a trillion-dollar conglomerate and gathered a large number of loyal shareholders, making himself the most admired investor in the world. Now, as the legendary CEO who has led the company for nearly sixty years prepares to pass the baton, Vice Chairman Greg Abel, who has been waiting in the wings for four and a half years, will take over as CEO on January 1st of next year, while the 95-year-old Buffett will remain as Chairman. Investors must face the reality that the halo that has surrounded Berkshire's stock price because of Buffett will eventually fade, and the management of dozens of subsidiary companies may transition from remote control to more direct and hands-on involvement. Some shareholders have already started calling for Berkshire to take a more traditional approach, such as paying dividends for the first time. Lawrence Cunningham, a law professor at George Washington University and author of several books on Buffett and Berkshire, pointed out that "Buffett has brought a huge halo effect." He believes that Abel must make skeptics believe that Berkshire can continue to thrive even without Buffett personally making acquisitions, writing shareholder letters, and delivering witty remarks at annual meetings. "Don't expect him to tell jokes and eat peanut brittle at the annual meeting," Cunningham said. "His biggest challenge is to acknowledgeand make the world acceptthat he is not Warren Buffett." Three weeks before the transition, Berkshire has already made adjustments to its management team: Abel will transfer the direct supervision of 32 consumer, service, and retail companies to Adam Johnson, who will continue to manage the NetJets Deluxe Corporation fleet; Geico will be taken over by Nancy Pierce, who replaced Todd Combs, the former investment deputy who left to join JPMorgan Chase, and the company has also appointed an internal Chief Financial Officer and internal General Counsel for the first time. Michael Ashley Sherman, Chief Investment Officer of California's Running Point Capital, assesses that Abel is arranging "trusted deputies and fresh blood," searching for a balance between continuity and modernization. Berkshire has undergone transformation in the past sixty years In the past sixty years, Buffett transformed Berkshire from a failing textile factory in Omaha, Nebraska into a $1.07 trillion "Sherman tank of a company," with nearly 200 companies under its umbrellaBNSF Railway, Geico car insurance, Berkshire Hathaway Energy, Brooks running shoes, and Duracell batteriesmaking it a microcosm of the American economy. Buffett also solidified his reputation as an investor by long-term holding stocks such as Apple Inc. (AAPL.US) and American Express Company (AXP.US). Abel, who joined in 2000, managed the energy business for ten years and has been overseeing non-insurance operations as Vice Chairman since 2018. CFRA Research analyst Casey Seifert believes that Abel may be more hands-on than Buffett, focusing on reducing operational costs and finding growth strategies. "This tighter management is more leveraged than Berkshire has suggested externally," Seifert said. How will Berkshire develop? Although Berkshire's stock price has increased approximately 60,000 times since 1965, far exceeding the S&P 500's rise of 460 times during the same period, its performance in recent years has been flat or slightly lagging behind the index. Buffett warned in his November letter to shareholders that the company's size "will be a drag" and that its overall prospects are only "slightly better than average." Abel must address the challenge of a huge cash pile of $381.7 billion, which serves as both a significant safety net and a drag on returns. James Armstrong, President of Pittsburgh's Henry H. Armstrong & Associates and a shareholder of Berkshire for 40 years, said, "We no longer expect a 23% compound return like in the Buffett era, it's just not feasible with trillions in assets; if Greg can stabley achieve 8%-10% every year, I will be satisfied." Despite having ample cash, Abel's acquisition playbook is still constrained by the inflated valuations pushed up by the private equity wave. "There are people banging the table and saying 'Invest the money quickly,'" Armstrong said, "but don't touch that money unless the price is right." For years, many investors have called on Berkshire to break its record of not paying dividends since 1967dividends have historically contributed 31% to the total return of the S&P 500, even at a 2% payout rate, it would only cost about $21 billion per year. Seifert predicts that "shareholders will increasingly demand dividends, clearer buyback plans, and a more formal capital allocation strategy." Moreover, Berkshire's disclosure of information is considered opaque and fragmented, with some large subsidiaries receiving only a few lines in the financial reports, leaving the overall profit capability unclear. However, as Abel weighs these demands, many long-time shareholders do not want the company to lose its "Berkshire-ness." Steve Check, President of California's Check Capital Management, said, "We don't want to change the DNA of Berkshire." The scepter has not been completely handed over: Buffett's voting rights and the uncertainty of the succession team The succession team remains uncertain: how long will Ajit Jain, the 74-year-old insurance chief who has been with Buffett for 40 years, stay on board? The future of Ted Weschler, another stock deputy, is also unclearspeculation in the market has suggested that he and Combs may take over the stock investment portfolio, but Buffett has implied in recent years that Abel is capable. Furthermore, Buffett still holds 29.8% of the voting power, and he or his estate will have a significant influence in the coming years, enough to block any radical shareholder actions. Check said, "As long as Warren is still showing up to work every day and sitting in the chairman's seat, Berkshire will still bear his fingerprints." However, at 63 years old, Abel is young enough and has enough time to witness and shape the next chapter of Berkshire. Cunningham concluded, "Greg will have a long runway ahead of him."