Is Greg Abel’s Berkshire Hathaway worth your investment dollars?

Baskin Wealth Management head of research Ernest Wong says Berkshire Hathaway (Berkshire Hathaway Stock Quote, Chart, News, Analysts, Financials NYSE:BRK.B) remains an attractive investment under CEO Greg Abel, citing the company’s acquisition activity, diversified operations and ability to generate interest income from its substantial cash holdings.

Speaking on BNN Bloomberg’s Market Call on Oct. 28, Wong said investors remain concerned about Berkshire’s leadership transition following Warren Buffett’s decision to step back from the company.

“We think clearly, he’s a very capable person. He has a lot of operational expertise, especially with their energy business.”

“The worry for Berkshire Hathaway is whether CEO Greg Abel is going to be able to handle the management of this company without Warren Buffett after he resigned as the chairman of the company earlier this year,” Wong said. “We think clearly, he’s a very capable person. He has a lot of operational expertise, especially with their energy business.”

Wong said Abel’s experience managing Berkshire’s energy operations should help him oversee the conglomerate’s diverse businesses, which span insurance, utilities, railroads, manufacturing and retail. He also noted Berkshire’s ongoing investment activity as a source of future growth.

“Berkshire Hathaway is very busy making acquisitions. They acquired a homebuilder. They invested a lot of money into Google,” Wong said. “One other thing that we like about Berkshire is that they’re benefiting from interest rates because they have a large cash position. So they’re going to be earning more interest income from this current environment.”

Berkshire formally appointed Warren Buffett chairman emeritus on Sept. 18, with his son Howard G. Buffett assuming the role of chairman. Warren Buffett remains on the board and will continue providing advice, while Abel oversees the company’s day-to-day operations as CEO.

Berkshire shares have gained 11.5% over the past 12 months, 59.4% over three years and 89.6% over five years. Of the analysts covering the stock, two rate it “Buy,” three “Hold” and none “Sell,” with a consensus target of US$563.

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