Berkshire Hathaway shares dropped 2% in premarket trading after Warren Buffett, the famed investor, announced he would step down as CEO of the $1.16 trillion conglomerate after leading it for six decades.
The company’s board voted unanimously to name Vice Chairman Greg Abel as the new president and CEO, effective next year, while Buffett will remain as chairman.
Buffett, who has led the company since 1965, revealed the decision to transition the leadership to Abel during Berkshire’s annual meeting in Omaha, Nebraska, on Saturday. The change comes as part of a long-standing plan to prepare for Buffett’s eventual departure, but the timing of the announcement caught many by surprise, as the 94-year-old had not previously indicated when he would step down.
Shares of the company, which owns a diverse range of businesses including railroads, insurance companies, and ice cream makers, fell to $528.80, putting them on track to lose billions of dollars in market value if the drop continues through the trading day. Despite this, Berkshire’s stock has surged about 33% in the past year, outperforming the S&P 500, which gained 12%.
Buffett’s decision to remain as chairman while passing on the CEO role to Abel is expected to offer some reassurance to investors. However, there remains uncertainty about how Berkshire’s vast portfolio of 189 businesses, $264 billion in stocks, and $348 billion in cash will be managed in the long term under new leadership.
Abel, who has overseen most of Berkshire’s subsidiaries since 2018, expressed during the annual meeting that he would take a more active role in managing the company, while maintaining the autonomy of the businesses under Berkshire’s umbrella. Despite the changes, units like Geico and National Indemnity will continue to report to Vice Chairman Ajit Jain, as they have done in the past.
