Berkshire worries grow as Buffett’s CEO handover nears

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Friday before May 2 Surprise statement from Buffett at Berkshire’s annual meeting where he planned to resign. B shares It closed at an all-time high of just under $540 per share.

At that point, they were outperforming everyone else. S&P 500 increased by 22.4 points for the year.

Today, they are 10.9 points behind the benchmark index; That represents a slight improvement from Wednesday’s 12.2-point gap, which was the largest in 2025.

B shares fell 11.5% after Buffett broke the news. That’s still above its early August low, down almost 15%, but below the short-term closing high of about $507 on Sept. 4.

Analysts at Keefe, Bruyette & Woods are particularly concerned.

They downgraded Berkshire in a report dated October 26 A shares They decided to go from “market perform” (hold) to “underperform” (sell) and lowered their price target from $740,000 to $700,000.

The stock closed today at $715,740.

Under “Many Things Are Moving in the Wrong Direction,” Meyer Shields and Jing Li write: “We believe GEICO’s potential insurance margin peak, declining property catastrophe reinsurance rates, lower short-term interest rates, tariff-related pressure on rail, and the risk of weakening alternative energy tax credits will lead to underperformance over the next 12 months.”

They attribute the stock’s underperformance relative to the S&P and other insurance stocks in recent months “largely” to Buffett’s May announcement.

There’s also what they call Berkshire’s “historically unique succession risk”; this “reflects Buffett’s arguably unrivaled reputation and, unfortunately, what we view as inadequate disclosure that will likely deter investors when they can no longer trust Mr. Buffett’s presence at Berkshire Hathaway.”

So, Berkshire doesn’t operate like most other companies; This is partly because he doesn’t issue forecasts or meet with analysts, but investors felt they could trust Buffett. Without him, Wall Street probably won’t give the company and new CEO Greg Abel as much leeway.

In Berkshire’s article titled “The New Normal… No ‘Buffett Premium'”, Wall Street Magazine “There are people who have great confidence in Warren Buffett. For them, that’s where the investment thesis begins and ends,” KBW quotes Shields as saying.

However, as a counterpoint, Daily Chris Bloomstran, president of Semper Augustus Investments Group, argued that Berkshire was overvalued just before the May meeting, and that its more than 5% YTD gain was significantly better than rival GEICO. GradualIt dropped by 14%.

He’s buying shares and doesn’t think Buffett’s job change will bring the shares down. “Everyone I know in the Berkshire world has rave reviews and good things to say about Greg.”

Henry Asher of Northstar Group also told the paper that Berkshire’s operating companies would not change even if Abel’s stock-picking ability doesn’t match Buffett’s incredible record.

“You’re not going to cancel your shipment at Burlington Northern because Buffett isn’t there. Businesses will continue to generate massive amounts of cash flow with or without Buffett.”

(Buffett already said will not be on stage (He will serve as chairman for next May’s meeting.)

Buffett clearly foreshadowed the change of authorship when he wrote. this year’s letter“It won’t be long before Greg Abel replaces me as CEO and writes the annual letters,” he said before the May announcement.

But on Nov. 10, he will send letters to his three children and shareholders, likely to accompany gifts to family foundations. thanksgiving tradition In recent years.

One apply this weekBerkshire Hathaway announced that it sold 401,514 shares DaVita On Monday for $54 million.

DVA shares fell nearly 8% this week after the dialysis company reported third-quarter earnings below analysts’ expectations As patient costs increase and treatment volume decreases.

The stock is down more than 20% for the year.

But this week’s relatively small selloff is almost certainly not a reaction to the stock’s weakness.

One 2024 agreement with DaVitaBerkshire has promised to keep its stake at or below 45% of the company’s outstanding shares.

Inside DaVita quarterly report it reported this week that buybacks reduced its outstanding shares from 75.5 million to 70.6 million, which would increase Berkshire’s stake to 45.6%.

Berkshire is reducing its total stake to 31.8 million shares (now worth $3.8 billion), bringing its stake percentage back to exactly 45.0%.

It has made similar sales in recent quarters to stay at the agreed-upon level.

Warren Buffett says The natural course of almost all governments is to devalue their currencies, and that is “scary.”

WARREN BUFFET: We really don’t want to own anything that we think is in a currency that is going to hell. That’s the biggest thing we worry about about the US currency.

What I mean is that the tendency for a government to want to devalue its currency over time is; There is no system that can beat this.

You can choose dictators, you can choose representatives, you can do anything.

But – but people – there will be a push towards weaker currencies.

And of course, I mentioned briefly in the annual report that what scares me in the United States is fiscal policy, because that’s the way it’s done.

And all the motivations are to do a lot of things that can cause problems with money.

But this is not limited to the United States. It exists all over the world. And in some places it regularly spirals out of control.

You know, they’re losing value at breathtaking rates, and it keeps happening. I mean, you people can study economics and have all kinds of regulations.

But ultimately, if you have people who control the currency, you can and will print paper money, or you can mess around with the currency. clipping of currencies Just like they did centuries ago.

There will always be people; that’s the nature of their job, I’m not singling them out as particularly bad or anything like that.

But the natural course of government is to devalue the currency over time, and this has significant consequences.

And it is very difficult to create checks and balances in the system to prevent this from happening.

And we had a lot of fun here recently – what about the first hundred days [of the second Trump administration] or the last hundred days, whatever you want to call it; Watching what happens when people try to make sure they don’t face financial risks.

And this game is not over and will never be over, you know.

If you research the major inflations of the post-World War II period, you will see that it is a list that goes on forever and the same names keep popping up.

So currency, the value of currency is a scary thing.

Holdings as of June 30, 2025, as reported. Berkshire Hathaway’s 13F filing On August 14, 2025, except:

A complete list of holdings and current market values ​​is available on CNBC.com’s Berkshire Hathaway Portfolio Tracker.

Please send me any questions or comments about the newsletter at: alex.crippen@nbcuni.com. (We’re sorry, but we do not forward questions or comments to Buffett himself.)

Additionally, reading Buffett’s annual letters to shareholders is highly recommended. There are people gathered on Berkshire’s website here.

— Alex Crippen, Editor, Warren Buffett Watch