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Legendary investor Warren Buffett to step down from Berkshire Hathaway today. What's next?
Warren Buffett's personal fortune of Berkshire stock is worth roughly $150 billion even after giving more than $60 billion away over the past 20 years.
Legendary investor Warren Buffett is stepping down as the CEO of Berkshire Hathaway on Wednesday (December 31), bringing to a close a six-decade-long era of transforming a struggling New England textile firm into a massive conglomerate.
Greg Abel will take over Berkshire Hathaway from Buffett, also known as the “Oracle of Omaha”. It will surely be challenging to fill the giant void that Buffett will leave behind.
Many regard Buffett as the world's greatest investor after he grew Berkshire from a struggling enterprise that he started buying up for $7.60 a share in 1962, to the massive conglomerate it is today, with shares that now sell for more than $750,000 each. Buffett's personal fortune of Berkshire stock is worth roughly $150 billion even after giving more than $60 billion away over the past 20 years, the Associated Press reported.
Berkshire has routinely outpaced the S&P 500 for decades as Buffett acquired insurance companies, such as Geico and National Indemnity, manufacturers like Iscar Metalworking, retail brands like Dairy Queen, major utilities, and even one of the nation's largest railroads, BNSF. Along the way, Buffett bought and sold hundreds of billions of dollars' worth of stocks and profited handsomely from his famously long-term bets on companies like American Express, Coca-Cola, and Apple.
Berkshire has struggled to maintain that pace in recent years, as it has grown significantly and also faced challenges in finding new and substantial acquisitions. Even this fall's $9.7 billion acquisition of OxyChem probably isn't big enough to make a difference in Berkshire's profits. Investors will be watching closely to see what changes Abel might make in Berkshire's trajectory.
Buffett isn't going anywhere, and Abel has already been managing all of Berkshire's noninsurance businesses since 2018. He will remain chairman and plans to continue coming into the office each day to help identify new investments and offer Abel any advice he requests.
Part of Buffett’s sales pitch to company founders and CEOs considering selling their companies has always been that Berkshire would largely allow them to continue running their companies in the same way, as long as they delivered results. So even as the mogul retires, no wholesale changes are expected.
The Greg Abel era at Berkshire Hathaway
The world learned in 2021 that Greg Abel was to become the designated successor at Berkshire, when Warren Buffett’s longtime business partner, the late Charlie Munger, assured shareholders at an annual meeting that Abel would maintain the company’s culture.
He has already demonstrated himself to be a more hands-on manager than Buffett, but he still adheres to the Berkshire model of autonomy for acquired companies. Abel asks tough questions of company leaders and holds them accountable for their performance.
Abel announced some leadership changes earlier this month, following the departure of investment manager and Geico CEO Todd Combs, as well as the retirement of Chief Financial Officer Marc Hamburg.
Abel also said he's appointing NetJets CEO Adam Johnson as manager of all of Berkshire's consumer, service and retail businesses. That essentially creates a third division of the company and takes some work off of Abel's plate. He will continue to manage the manufacturing, utility and railroad businesses.
