Warren Buffett's planned successor plows $25 million into Berkshire Hathaway after the investor prods him to buy more stock

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Warren Buffett's planned successor plows $25 million into Berkshire Hathaway after the investor prods him to buy more stock
Warren Buffett.AP Images
  • Warren Buffett's planned successor plowed about $25 million into Berkshire Hathaway stock on Friday.
  • Greg Abel, one of Buffett's top deputies, now owns $105 million worth of Berkshire's "A" shares.
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Greg Abel, the man expected to succeed Warren Buffett as Berkshire Hathaway's CEO, can take a hint.

Abel, who heads up Berkshire's non-insurance operations, bought 55 of the company's Class A shares on Friday for about $447,000 each, or $25 million in total. A Securities and Exchange Commission filing revealed the transactions on Tuesday.

The purchases, made via Abel's family trust, increased his Berkshire stake to 228 "A" shares, valued at $105 million as of Tuesday's close. Abel also owns around 2,400 of the much cheaper "B" shares, worth about $716,000.

Abel's increased stake will undoubtedly please Buffett. The 92-year-old investor wrote in his recent shareholder letter that "our future CEOs will have a significant part of their net worth in Berkshire shares, bought with their own money."

Berkshire's latest proxy statement also notes the company looks for directors who have had "a significant investment in Berkshire shares relative to their resources for at least three years."

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Abel owned just five "A" shares worth less than $3 million, along with his "B" shares, prior to September last year. He paid about $68 million for 168 "A" shares that month, massively boosting the size of his stake.

Even with his latest purchases, Abel seems to fall short of Buffett's expectation that his successor hold a significant amount of his personal wealth in Berkshire stock.

Abel received an astounding $870 million before taxes in return for selling his stake in Berkshire Hathaway Energy back to the company last year. He's also earned over $19 million of annual cash compensation in each of the last four years.

Buffett believes that bosses should hold sizeable stakes in their companies, as that means they have "skin in the game" and do well when their shareholders do well. The investor has set an example by keeping virtually all of his $106 billion net worth in Berkshire stock.

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