Squawk Pod: Greg Abel kicks off Berkshire Hathaway’s annual meeting- 05/01/26 | Audio Only

This is SquawkPod and I'm CNBC producer Cameron Costa. On today's episode, we head to Omaha where the Berkshire Hathaway annual meeting is just starting to get underway.

Hello everybody. I am here live at the Jazwares booth, the maker of the Squishallows. 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.

In a sit-down interview with Becky before the crowds file in, he discusses this new chapter of Berkshire.

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 recognize 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.

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.

It's Friday, May 1st, and Squawk Pod begins right now. Stand Andrew by in three, two, one, Q. Andrew.

Good morning and welcome to Squawkbox right here on CNBC. I'm Andrew Ross Sorkin 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. This 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. It is slightly down from last year, down by about 10%. Of those requests, some 30 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. See's 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. Brooks 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. Berkshire 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. I'm imagining that it's going to be like a reunion. I mean, what 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 yeah, I don't know. We'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 breakfast 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. Now, 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 airlines that are air 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.

Joining 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 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?

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 there 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 recognize 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? How are they performing? I mean, 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 shareholder 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 is dead. Value's dead. Buffett is 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 and I would give it some time to play out.

Okay. 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. You'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 advantage over a long period of time. And I think what's happened is the financial crisis created this 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. So 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'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. I 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 companies with this unique culture that is really data driven. And 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? And first of all, how do you feel about it overall?

Well, 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 pinging 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. This happened with oil and gas partnerships in the 80s. It's just sort of the last up with all the crappy IPOs in the late 90s. They stuck 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 a quite well-regarded private equity firm and he is just getting his first deal in the portfolio and I said what is it? He 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's 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.

Let 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 Markel 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 Markel since it came public. And in fact, I met the now CEO when he was still a clerk 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. 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 had made Berkshire what it is and come to the conclusion there are no shortcuts. There 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 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 plans for example are even invested with these sorts of funds. They are actually a cancer in the corporate governance business because what they really are is short-term investors. And 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 moral authority in somebody who says exactly what they think about things here.

It's one 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 maybe filters.'

You have zero somethings. Is that... Well, we love that. And it's great to see you here. Thank you so much for taking the time today.