Buffett’s Exit Bombshell: Berkshire Shares Stumble While Street Bets on Succession Play

Wall Street’s favorite octogenarian is passing the torch—and the market’s already pricing in the uncertainty. Berkshire Hathaway shares dipped 2.3% in after-hours trading following Warren Buffett’s surprise CEO transition announcement.

Pre-market action tells a different story though: select Berkshire holdings are rallying as traders gamble on which Buffett protégé will get the corner office. (Spoiler alert: they’re all betting on the same spreadsheet-obsessive who’ll probably just replicate the Oracle’s playbook with 0.1% more ESG buzzwords.)

The ultimate irony? This ’earth-shattering’ leadership change matters less than the Fed’s next mood swing—but try telling that to the CNBC anchors milking it for 72 hours of coverage.

Buffett trusts Abel to continue his legacy at Berkshire Hathaway

At the Saturday meeting, Buffett did not give a concise elaboration on how the transition would take place, although he confirmed Abel will step up to the chair position. The vice chairman addressed shareholders, promising to be more active in overseeing Berkshire’s subsidiaries, while continuing to let each unit operate independently and “in a very positive way.”

Abel has overseen most of Berkshire’s non-insurance businesses since 2018, while the firm’s insurance operations, including Geico, General Re, and National Indemnity, will continue to report to Vice Chairman Ajit Jain.

KBW analyst Meyer Shields told investors in a client note that Abel is competent, but the surprise Warren Buffett exit news would likely weigh on the stock in the NEAR term. 

“Buffett’s departure will probably impact investors’ view of Berkshire more than it will actual operations,” Shields wrote.

According to market insiders, Buffett is supposedly irreplaceable for his investment acumen and his reputation as the Oracle of Omaha. The company holds stocks in several industries like railroads, insurance, energy, and even an ice-cream maker, which many have coined as a symbol of “stable, long-term value” since Buffett took charge in 1965.

Berkshire shareholders are worried about how the firm’s 189 operating units, $264 billion in stocks, and $348 billion in cash reserves would be managed without the $160 billion-worth CEO.

Stock market in the green, futures slips

Pre-market data shows the US stock market could start the week on a stronger footing, but stock futures are down across major indices. Futures tied to the S&P 500 fell 0.8%, Dow Jones Industrial Average futures dropped 278 points (0.7%), and Nasdaq-100 futures lost 0.9%.

The S&P 500 in Monday’s session looks set to open with a 1.5% gain, its tenth consecutive positive session and longest winning streak since November 2004. The tech-heavy Nasdaq Composite and Dow Jones Industrial Average also posted gains of 1.5% and nearly 1.4% respectively last Friday.

The Federal Reserve is slated to begin a two-day policy meeting on Tuesday, and the interest rate decision comes the following day. According to CME Group’s FedWatch tool, traders see only a 3.2% chance of a rate cut at this meeting.

The US dollar weakened for a second straight day, threatening to end the S&P 500’s winning streak. Brent crude futures plunged by as much as 4.6% following OPEC+’s decision to increase supply, while gold prices ROSE to $3,260 due to a weaker greenback.

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