Warren Buffett to Step Down Following Sixty Years at Berkshire Hathaway

Warren Buffett, aged 94, has transformed Berkshire Hathaway Inc into a corporation valued at over $1.16 trillion, establishing himself as a renowned billionaire known for his investment acumen and humor. He plans to retire at the end of the year after leading the conglomerate for sixty years.

Following board approval, Greg Abel, the vice chairman for non-insurance operations, will take over leadership of the conglomerate, as Buffett announced during the company’s annual shareholder meeting in Omaha, Nebraska, on Saturday. He mentioned that the board is set to meet on Sunday.

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The announcement surprised both the board and Abel, who, despite being anticipated as Buffett’s successor, was taken aback by the news at the conclusion of the annual meeting.

“That’s the news hook for the day,” Buffett remarked. “Thanks for coming.”

Under Buffett’s leadership as chairman and CEO, Berkshire experienced remarkable growth as he made acquisitions and investment decisions for the company’s portfolio alongside his trusted advisor and vice chairman, Charlie Munger, who passed away in 2023 at age 99.

The conglomerate acquired a diverse array of businesses, which Buffett described as indicative of the overall U.S. economy. He noted that investing in Berkshire was similar to betting on America.

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“The world is Berkshire’s oyster — a world offering us a range of opportunities far beyond those realistically open to most companies,” Buffett wrote in his 2015 annual letter.

Buffett captured the focus of fellow CEOs and some presidents, drawing tens of thousands of shareholders to Omaha every year for the annual meeting.

His investment success — a 20% compounded annual gain in Berkshire stock from 1965 to 2024, compared to about 10% for the S&P 500 — gave him the leverage to influence stock prices and negotiate advantageous agreements with Goldman Sachs Group Inc. and General Electric Co. during crises.

Buffett Partnership

Buffett began managing funds at a young age, inspired by Benjamin Graham’s investment philosophy. He entered the corporate domain when his Buffett Partnership Ltd acquired shares in Berkshire. In 1965, he took control of the remaining company shares.

Initially composed mainly of struggling textile operations that would eventually decline, Berkshire laid the foundation for Buffett’s current enterprise.

Methodically, he built and acquired operations across various industries, including insurance, which provided him cash flow or “float” to support his investment strategy.

Today, Berkshire encompasses businesses ranging from the railroad BNSF to auto insurer Geico, extensive energy operations, and retailers such as Dairy Queen and See’s Candies. The company’s portfolio generated $47.4 billion in annual operating earnings in 2024.

Buffett also expanded the stock portfolio — making significant investments in well-known companies like Apple Inc. and American Express — allowing Berkshire another avenue to benefit from the growth of firms it did not fully own.

‘All-In Wager’

When Buffett committed to purchasing BNSF for $26 billion in 2009, he referred to it as an “all-in wager on the economic future of the United States.” The billionaire has consistently hailed the prospects of the U.S. economy.

An “all-powerful trend” toward increased productivity made the nation exceptional, he stated in a 2015 annual letter. Throughout his life, the country’s economic output per capita had increased sixfold, “a leap far beyond the wildest dreams of my parents or their contemporaries,” he mentioned.

Abel, 62, a longstanding deputy of Buffett, will inherit a flourishing business.

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While Berkshire recently reported a 14% decline in first-quarter operating earnings to $9.6 billion due to substantial losses in its insurance unit linked to California wildfires, increased holdings in Treasury bills bolstered investment income.

During the Covid-19 pandemic, Buffett faced challenges in deal-making due to inflated valuations of strong businesses, resulting in a considerable cash reserve and limited attractive investment opportunities. Rather than pursuing acquisitions, Buffett chose share buybacks to allocate capital, although he diverged from this trend with an $11.6 billion acquisition of Alleghany Corp in 2022.

Last year, he expressed frustration over the scarcity of significant deals that could yield “eye-popping performance” while Berkshire’s cash reserve reached another record. The few U.S. companies capable of making a meaningful impact on Berkshire had already been “endlessly picked over by us and others,” he stated.

Since then (2024), as the billionaire reduced his stakes in Apple and Bank of America Corp while avoiding major deals, Berkshire’s cash reserve continued to grow, reaching $347.7 billion as of March 31.

There were also occasional miscalculations. Buffett admitted that he overpaid for aerospace-equipment manufacturer Precision Castparts, leading to a $10 billion write-down in 2020. Furthermore, Buffett and Munger were notably slow to recognize value in technology stocks, although they later expedited their investments in Apple shares.

Nonetheless, his long-term success has attracted a devoted following over the years. At annual meetings held in a packed Omaha sports arena, he and Munger would discuss various topics from stock markets to cryptocurrency, as well as life and success.

The annual event, dubbed “Woodstock for Capitalists,” along with his widely circulated annual letter, contributed to the investor’s eagerness to educate others.

Buffett’s memorable sayings are often quoted by his admirers. He reiterated one of his famous lines in 2018 regarding whether troubled Wells Fargo & Co. — a longstanding Berkshire investment — might reveal further misconduct: “There’s never just one cockroach in the kitchen.”

Concerning over-leveraged financial institutions during the global crisis of 2008, he commented: “You only learn who has been swimming naked when the tide goes out.”

Decentralized Management Approach

Despite Buffett’s immense following, his daily management of Berkshire was straightforward. He consistently preferred a decentralized management model, allowing the leaders of Berkshire’s various businesses to operate independently while checking in periodically.

Buffett viewed one of his primary responsibilities as capital allocation for Berkshire, determining where to invest resources, and reportedly dedicated considerable time to reading in his Omaha corporate office.

That office had only 27 employees as of last year.

“Buffett’s choice to focus on a few areas and dedicate his attention to them for half a century was remarkable,” Munger stated in an annual letter.

“Buffett succeeded for the same reason Roger Federer excelled in tennis.”

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