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Berkshire Hathaway (LSE:BRK.B) shares fell roughly 5% on Monday after Warren Buffett, the legendary CEO, surprised investors at the annual meeting by announcing he will step down at the end of 2025, officially naming Vice Chair Greg Abel as his successor. The market reaction erased about $59bn in value, reflecting both uncertainty and the immense influence Buffett has wielded over the company for six decades.
Why did the share drop?
The drop is mainly attributed to investor jitters about the future without Buffett at the helm. While Abel had been publicly identified as the likely successor since 2021, the exact timing of Buffett’s transition was unknown, and many shareholders were caught off guard by the suddenness of the announcement. Such market reactions are common when iconic leaders step down, as seen when Steve Jobs left Apple or Bill Gates exited Microsoft — both stocks initially dipped but later rebounded.
What’s more, some analysts have questioned whether Abel would be the right person to oversee the company’s vast equity portfolio. As of 31 March 2025, Berkshire’s holdings were valued at $263.7bn. Apple, American Express, Coca-Cola, Bank of America, and Chevron make up the top five positions.
“Greg Abel has a solid operational background”, says CFRA analyst Catherine Seifert, “but not the investment experience or expertise to replace a renowned investor like Warren Buffett”. One possible path forward would be for Berkshire to formally establish a chief investment officer role.
The company’s results were possibly another reason for the share price fall. Some investors may have been disappointed as Q1 operating earnings slipped 14.1% and underwriting income fell 50%.
Investors may spy an opportunity
Despite the market’s knee-jerk reaction, many analysts and seasoned investors see this pullback as a potential buying opportunity. Greg Abel is not an unknown quantity; he has been with Berkshire for over 25 years, successfully running the company’s energy division and later overseeing all non-insurance operations. Abel is widely regarded as a capable and disciplined leader. He also shares Buffett’s management philosophy and long-term vision. Investors will likely see his promotion as a move toward continuity rather than disruption.
Berkshire Hathaway’s underlying business remains exceptionally strong. The company boasts more than $347bn in cash and liquid assets. This gives it unparalleled financial flexibility in a volatile market. Its diverse portfolio includes wholly owned businesses such as BNSF Railway and Geico, as well as major equity stakes in blue-chip companies like Apple and Coca-Cola. These assets provide a stable earnings base and significant growth potential, regardless of who is CEO.
The bottom line
The loss of Buffett’s personal touch and investing acumen is not insignificant. However, the company’s decentralised structure and wealth of experienced managers should help smooth the transition. The company’s strategy has also been phenomenally successful over the long run. So why would anyone change course? Personally, I’m still bullish on the long-term outlook for Berkshire. I may add to my existing holdings if the current entry point remains. I wouldn’t say the opportunity is unmissable. But it’s certainly enticing.
