Buffett: The end of a golden era for Berkshire Hathaway

“The investing world’s North Star” is officially a retiree, said Yun Li in CNBC.com. Dec. 31 marked Warren Buffett’s last day as the chief executive of Berkshire Hathaway, capping off a 60-year tenure that saw him transform an obscure New England textile mill into one of the most “powerful compounding engines in market history.” Buffett, 95, will remain the firm’s chairman. But he hands the reins to successor Greg Abel, “leaving Wall Street grappling with how singular” his reign had been. The numbers speak for themselves: Between 1965, when Buffett took over, and the end of 2024, Berkshire’s shares rose 5.5 million percent, trouncing the broader market and turning ordinary investments
into fortunes. Buffett’s secret was “an unusually spare formula: use insurance float as a source of low-cost capital, buy businesses with durable cash flows, and allow time to do most of the work.” It produced long-held stakes in blue-chip companies like Coca-Cola and American Express, and the capacity to amass a remarkable portfolio of U.S. staples, from the insurance company Geico and BNSF Railway to See’s Candies and Benjamin Moore paints.

“It’s hard to imagine a tougher act to follow,” said The Economist. Berkshire has mostly been known “as a vessel for Buffett’s investing genius,” which has proved “wildly successful” for its shareholders. But Abel, who ran Berkshire’s noninsurance operations, is not a stock picker, and one of Buffett’s top investment lieutenants, Todd Combs, recently left for JPMorgan Chase. “Abel’s talents as an investor will soon be put to the test.” Berkshire enters the Abel Era with “more questions than answers,” said Eric Platt in the Financial Times. “The new CEO has only seldom made himself available to the press and investors.” Abel has “signaled the company’s investment philosophy will not change.” But Berkshire’s recent purchase of a $4.3 billion stake in Google parent
Alphabet in December raises the question: Was Abel involved? If so, it would signal he is “open to making big bets on fast-growing technology companies.”

The most pressing question for Abel, said Krystal Hur in The Wall Street Journal, is what to do with $358 billion in cash. “Buffett has long prided himself” on having an ironclad balance sheet “with plenty saved up for a rainy day.” Berkshire’s piggy bank, however, has enough to buy Home Depot outright, with a few billion to spare. “The risk to holding that much cash is that the return Berkshire can receive on such holdings could fall as the Federal Reserve lowers interest rates.” But investors say they don’t expect Abel to make any big investments until stock prices come down.

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“What’s the key to Buffett’s success?” asked biographer Roger Lowenstein in The Boston Globe. “I believe it is his character.” Wall Street is full of intelligent and ambitious people, “but few have displayed Buffett’s unswerving integrity and dedication to principle.” That’s the biggest void left upon his retirement, said Seth A. Klarman in The Atlantic. He exits “at a time when many of the most successful people in the business community seem single-mindedly focused on making money,” rather than doing the right thing for the business and its shareholders. “In a world alarmingly short of proper role models,” Buffett’s leadership will be deeply missed.