Greg Abel, the new CEO of Berkshire Hathaway, used his first letter to shareholders to say this about his predecessor Warren Buffett: “Discipline, patience, and judgment define Warren’s investing.” Last week, John Ternus used his first investor call as CEO-elect of Apple to praise his predecessor’s “thoughtfulness, deliberateness and discipline when it comes to the financial decision-making”. This near-perfect echo is non-coincidental. Berkshire and Apple are the two greatest proponents of patience as a corporate strategy.
The implications of this patience for the future at the two companies are very different, however, and the two new bosses face correspondingly different challenges.
At Berkshire, strategic patience is manifested on the balance sheet. It holds almost $380bn in net cash, amounting to 30 per cent of its assets (for context, 10 years ago, cash was 10 per cent of Berkshire’s assets). Abel says he is “not anxious to deploy capital into subpar opportunities” but knows “there will be dislocations in markets that again will allow us to act”. That is: he’ll keep folding until he is dealt great cards, then bet big.