Warren Buffett announced he will step down as CEO of Berkshire Hathaway by the end of 2025. He will remain as chairman of the company. Berkshire Hathaway’s stock has fallen 10% since the announcement.
The stock reached an all-time high on May 2, prior to the company’s annual shareholder meeting. From that meeting to June 30, the stock fell 10%. The S&P 500 gained 9.1% during the same period.
Historically, Berkshire Hathaway has outperformed the S&P 500. From 1965 to 2024, Berkshire had a 19.9% average annual gain. The S&P 500 had a 10.4% gain during that time.
The news of Buffett stepping down has caused some investors to shift towards riskier, high-reward stocks. This has contributed to Berkshire’s recent decline. Berkshire Hathaway has a diversified portfolio.
It includes insurance businesses, the BNSF railroad, Berkshire Hathaway Energy, and stakes in various public companies.
Buffett’s successor and stock impact
In the first quarter of 2025, Berkshire reported record levels of cash equivalents and short-term Treasury bills.
Buffett prefers to value Berkshire based on its operating earnings. This reflects the performance of its businesses rather than market fluctuations. Berkshire’s operating earnings have grown over time through its controlled businesses and strategic acquisitions.
Under the leadership of incoming CEO Greg Abel, Berkshire may continue its cautious approach. It may also potentially begin paying dividends if the vast cash reserves are not used. Before he steps down, Buffett might choose to increase Berkshire’s stakes in some of his favorite investments.
Three stocks that could be on his radar are Occidental Petroleum, Amazon, and Chubb. Buffett is a big fan of Occidental Petroleum. Berkshire already owns a substantial $2.1 billion worth of Amazon stock.
Chubb is one of the more conservative investments in Berkshire’s portfolio. As Warren Buffett prepares to step down, these three stocks could see increased investment from Berkshire Hathaway. Buffett’s investment decisions have always been closely watched.
His final moves as CEO will be no different.
