Warren Buffett is one of the world's most famous investors. Although he was technically the CEO of industrial conglomerate Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB), it was his investment approach that really grew the business. Essentially, he used the company as an investment vehicle, buying entire companies and large stakes in publicly traded stocks.
He has handed the CEO role to a handpicked successor, Greg Abel. But Buffett may be making Abel's job more difficult over the long term with the changes he is making to his giving plans. Here's what you need to know.
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Buffett's ownership of Berkshire Hathaway totals around $140 billion. The company's market cap is roughly $1.05 trillion, so Buffett alone controls around 13% of the giant company. That's a big position, and it gives the former CEO a strong voice in corporate decision-making. To be fair, he's the chairman of the board of directors, so he has a strong voice anyway. But large shareholders often have to be consulted when big decisions are made.
This is where the shift away from giving shares to the Bill Gates Foundation comes into play. Unfortunately, Bill Gates has been caught up in the Epstein scandal, and Buffett has been distancing himself from the former Microsoft (NASDAQ: MSFT) CEO. So instead of donating Berkshire shares to Bill Gates' foundation, Buffett is donating the rest of his Berkshire stake to foundations run by his children.
This is a multi-year process that won't end until 2034, unless Buffett passes away, in which case it will happen more quickly. Regardless, so long as Buffett is still alive, it is unlikely that his children will do anything dramatic with their foundations' Berkshire positions. But a look at Hershey (NYSE: HSY) and Hormel (NYSE: HRL) is worth considering.
Both of these consumer staples companies have large foundations established by their founders. The Hormel Foundation has a stated goal of ensuring Hormel's ongoing independence. The Hershey Trust has stepped in to block acquisition attempts a couple of times. With a $1 trillion market cap, it is unlikely that Berkshire Hathaway will be acquired by another company. But there's another twist here.
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