Berkshire Hathaway (BRK-A, BRK-B) dropped over 5% on Monday as the conglomerate’s board said it had unanimously approved longtime CEO Warren Buffett’s appointment of vice chair Greg Abel as his successor, starting in 2026.
Class A shares dropped to $768,719 each while Class B shares declined to nearly $512 each.
Buffett announced the CEO change on Saturday at Berkshire Hathaway’s 60th annual meeting. The transition will take place at the end of the year, with Abel officially taking over on Jan. 1, 2026. Buffett will still remain chair, the board said.
Buffett confirmed Abel, who oversees the company’s non-insurance businesses, as his successor in 2021. But until now, the specific timeline for Buffett’s handing over the reins was unknown to investors.
“I do think this still caught a lot of investors off guard,” Edward Jones senior analyst Kyle Sanders said. “I think there’s a good portion of the investor base who just thought that Warren was going to keep running the company until he passed away.”
Berkshire Hathaway is the seventh-largest company in the S&P 500 (^GSPC), with a market cap of about $1.1 trillion.
Abel joined Berkshire as part of an acquisition of what became Berkshire Hathaway Energy in 1999.
During Saturday’s meeting, Abel talked at length about his view on Berkshire Hathaway’s current prospects, in particular the more than $300 billion in cash the company is currently holding. He said this cash pile is an “enormous asset for the company.”
“We do recognize it as a strategic asset, and it allows us to weather the difficult times and … not be dependent on anybody,” Abel said, adding, “We will never be dependent on a bank or some other party for Berkshire to be successful.”
Read more about Berkshire Hathaway’s stock moves and today’s market action.
Buffett said he has no plans to sell Berkshire stock as a result of the change and won’t be far away if needed.
“I would still hang around, and could conceivably be useful in a few cases, but the final word would be what Greg said, in operations, in capital deployment, whatever it might be,” Buffett said.
Since Buffett’s takeover of Berkshire in 1965, the company’s per-share value has compounded at a 19.9% rate, almost double the 10.4% average annual gain of the S&P 500, and resulted in a 5,502,284% return for shareholders.
Year to date, Berkshire Hathaway shares are up more than 13%, outperforming the S&P 500, which is down 4%.
Berkshire Hathaway has been accumulating cash on its balance sheet over the last couple of years.
Edward Jones’ Sanders has a Hold rating on the stock,
“For us, deploying some of this cash is really what the stock needs if it’s going to continue to move higher,” he said.
Ines Ferre is a Senior Business Reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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