Berkshire’s Buffett Is Stepping Down. Why Little Will Change and Why That’s OK.

Warren Buffett, shown in 2019. (JOHANNES EISELE/AFP via Getty Images)

Key Points

• Warren Buffett will step down as CEO of Berkshire Hathaway at year-end, with Greg Abel taking over, but Buffett will remain chairman and controlling shareholder.
• Berkshire Hathaway’s Class A shares are up 10% year to date, underperforming the S&P 500 index’s 19% total return.
• Uncertainty surrounds the management of Berkshire’s $300 billion equity portfolio and the future of its $350 billion cash balance.

The much-anticipated CEO succession at Berkshire Hathaway is set to take place at year-end, but it doesn’t look like much will change, at least initially. That may be just fine with many investors.

Warren Buffett, 95, will step aside after 60 years at the helm in favor of Greg Abel, 63. The veteran Berkshire executive now heads the company’s vast non-insurance businesses.

While Abel will take over as CEO, Buffett could remain an outsize presence at the company, with its market value of $1.1 trillion. He will remain chairman and the controlling shareholder with a 14% economic stake worth $147 billion and a 30% voting interest. He is giving away about 5% of his stake every year to philanthropies, but has no plans to sell a single share.

This could mean that important matters such as a potential dividend, stock buybacks, and the deployment of Berkshire’s cash balance of more than $350 billion could remain unresolved for some time, perhaps until after Buffett’s death. Berkshire doesn’t pay a dividend and hasn’t bought back stock since May 2024.

Investors seem to be taking a wait-and-see approach to the Abel regime, viewing Buffett’s departure as CEO as a negative.

Berkshire stock is ending 2025 on an uninspiring note. The Class A shares, which ended Wednesday at $751,245, are up 10% so far this year, against a 19% total return for the S&P 500 index. The shares are about 7% below their May high.

The stock trades for about 1.5 times estimated year-end 2025 book value, Barron’s calculates. That ratio is in line with the five-year average, suggesting the stock is fairly valued.

While the stock is slightly ahead of the market over the past 20 years, it is behind over the past 10 years, with an annualized 14.1% return compared with 14.9%, Bloomberg data show.

Berkshire unveiled a series o f management moves earlier in December, but none was significant save for the departure of Todd Combs, an investment manager and the CEO of Berkshire’s Geico auto-insurance unit. Combs, who is leaving for an investment role at JPMorgan Chase , was a member of Buffett’s small inner circle.

It remains unclear how Berkshire’s $300 billion equity portfolio will be managed. Will Berkshire manager Ted Weschler, who together with Combs has run about 10% of it, take over the whole thing or will Abel effectively run it?

Weschler is a veteran investment manager, but his equity performance since he joined Berkshire in 2012 remains unknown. Some Berkshire watchers speculate that he is behind the S&P 500 because investments like DaVita and Sirius XM Holdings , which he is believed to have bought for Berkshire, have underperformed.

It’s also unclear how long the head of Berkshire’s insurance operations, Ajit Jain, 74, plans to stick around. It isn’t known who his ultimate replacement will be.

Berkshire said earlier this month that Abel will be passing off day-to-day management of a group of consumer businesses to the head of Berkshire’s NetJets business, Adam Johnson. But Abel will oversee the major units, including the railroad BNSF and Berkshire Hathaway Energy, the big utility operation.

When he surprised shareholders at Berkshire’s annual meeting in May with the CEO succession news, Buffett indicated that he plans to be in the office every day. “I will come in and there may come a time when we get a chance to invest a lot of money,” Buffett said. “And if that time comes, I think it may be helpful with the board.”

Many Berkshire holders probably are happy that Buffett will be minding the store, and that no notable changes appear on tap. Abel may focus on what he does best: improving operations. The view among the faithful is, why change something that has worked so well for decades?

Berkshire’s cash may build, leaving it the wherewithal to make a major move, possibly guided by Buffett, if opportunities arise.

The next Berkshire milestone could be when Abel lays out his vision for Berkshire in his initial shareholder letter due in late February. Until then, it may be business as usual.

Write to Andrew Bary at andrew.bary@barrons.com