Key Takeaways
- Berkshire Hathaway CEO Warren Buffett, in a letter to shareholders on Monday, said he would retain a “significant” stake in the company as a vote of confidence in his successor Greg Abel.
- Abel will take over as CEO at the end of this year when Buffett plans to step down after 60 years at the helm of the conglomerate.
- Buffett also said he was accelerating the pace of charitable donations made to his children’s foundations, to which he intends to donate the entirety of his fortune.
Warren Buffett sought to allay investor concerns about his upcoming retirement in a letter to shareholders on Monday.
Buffett, in a Thanksgiving letter he said would become an annual tradition, said he plans to keep a “significant” number of Berkshire’s Class A shares until shareholders “develop the comfort” with incoming CEO Greg Abel that Buffett and his late business partner Charlie Munger “long enjoyed.” Buffett on Monday converted 1,800 “A” shares—worth about $1.3 billion—to “B” shares, which were donated to four family-run foundations.
Why This Matters
Warren Buffett, after 60 years leading Berkshire Hathaway, has become to some degree synonymous with the $1 trillion conglomerate. His impending departure is forcing some investors to question what they value about Berkshire: its portfolio of businesses and investments, or its legendary leader.
Buffett also said he plans to “step up the pace of lifetime gifts” to his three children’s foundations, to which he has promised to donate the entirety of his nearly $150 billion fortune. He said the acceleration was meant to increase the likelihood that his children—aged 72, 70, and 67—can dispense his fortune “before alternate trustees replace them.”
Buffett, who has led Berkshire for 60 years, said in 2021 that Abel would succeed him as CEO. He officially announced in May that the transition would happen at the end of this year.
Berkshire shares have fallen 7% since that announcement, while the S&P 500 has risen 20%. Analysts have attributed the stock’s underperformance to the “Buffett premium,” which refers to the boost Berkshire stock gets from Buffett’s unparalleled reputation on Wall Street and beyond.
“The acceleration of my lifetime gifts to my children’s foundations in no way reflects any change in my views about Berkshire’s prospects,” Buffett wrote. “I can’t think of a CEO, a management consultant, an academic, a member of government – you name it – that I would select over Greg to handle your savings and mine,” he added.
