Warren Buffett has been at the helm of Berkshire Hathaway (BRK.B) for over 50 years. However, the California Public Employees’ Retirement System (Calpers), the largest pension fund in the U.S., with $470 billion of assets, feels Buffett should not be more than CEO of the company.
Pundits in corporate governance support the idea that a company should not have the same person be both Chief Executive Officer (CEO) and Chairman of its board. This would keep a company’s board independent from its management. Calpers wants to make this idea a reality in Berkshire.
Calpers holds over 5.5 million Class B shares in Berkshire. Buffett has been the Chairman and CEO of Berkshire since 1970 and has about 32.1% of the voting interest. The Berkshire Board shares the same opinion as Buffett that, “a controlling shareholder who is active in the business, as is currently the case and has been the case for Mr.Buffett for over 50 years, should hold both roles.”
Additionally, the pension giant is also co-sponsoring a proposal to demand an annual assessment on how Berkshire Hathaway “manages physical and transitional climate-related risks and opportunities.”
Calpers added, “Berkshire’s existing disclosures are insufficient for investors to adequately assess the company’s physical and transitional climate-related risks and opportunities.”
Berkshire’s annual meeting is scheduled for April 30 in Omaha.
Earlier this year, Buffet lamented about a lack of buying opportunities in the market. Since then, Berkshire has put a chunk of its nearly $147 billion cash pile to use by announcing the $11.6 billion acquisition of Alleghany, a nearly $7 billion stake in Occidental Petroleum, and an 11.5% stake in HP.
Analyst Take
Morgan Stanley analyst Michael Phillips has reiterated a Hold rating on the stock while increasing the price target to $351 from $327.
Overall, the Street has a Hold rating on the stock based on a Buy and three Holds. The average Berkshire Hathaway price target of $356.67 implies the stock is fairly priced at current levels. That’s after a 16% gain in share prices so far this year.
Closing Note
While Calpers wants a new face as Chair of Berkshire, Buffett’s investing prowess has been on display for decades now. His performance is reflected in the 30.2% price gain for Berkshire shares in the past 12 months. The stock has a return on equity of 18.92% and asset growth of 9.73%.
Moreover, TipRanks data indicates investor sentiment in the stock is very positive, with the number of portfolios holding Berkshire shares up about 9.1% in the past month. Positive sentiment, coupled with near 30% momentum in the stock (past one year), and a positive 20-day moving average, may indicate further gains for savvy investors in the stock.
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