Should You Buy Berkshire Hathaway Stock, Even Though It's Down 10% Since Warren Buffett Announced He's Retiring as CEO?

Source The Motley Fool

Key Points

  • Legendary investor Warren Buffett is stepping down as Berkshire Hathaway CEO at the end of 2025.

  • Berkshire is down by 11% since Buffett’s surprise announcement.

  • 10 stocks we like better than Berkshire Hathaway ›

Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) reached an all-time high in early May. Then, Warren Buffett shocked the investing world at Berkshire's annual meeting by announcing his intention to step down from the CEO role at the end of the year.

Since his announcement, Berkshire stock is down by about 11%. Is this a justified decline because the "Buffett premium" is going away, or does this represent an opportunity to buy shares at a discount? Here's what you need to know.

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Not much is changing

First of all, Warren Buffett will turn 95 years old on Aug. 30. Is it really that much of a surprise that he isn't going to be running Berkshire for much longer? It just seems far-fetched that the market was pricing in a more than 10% premium on the hopes Buffett would continue to defy the odds and work into his late 90s. And to be honest, I feel that there's value in an orderly succession plan like this, as opposed to expecting Buffett to simply stay at the reins until he can't do it anymore.

It's also important to point out that on Jan. 1, 2026, the first day Buffett won't be CEO, not much is going to change from a day-to-day perspective. Berkshire's 60-plus subsidiary businesses largely operate with little or no oversight already. Greg Abel, who will take over as CEO, already oversees all non-insurance operations, and Ajit Jain is Berkshire's insurance head.

The biggest immediate changes will be that different people will be in control of the company's stock portfolio, and Abel will have power over Berkshire's $344 billion cash hoard. However, portfolio managers Ted Weschler and Todd Combs have been managing more of Berkshire's investments as the years have progressed.

Warren Buffett smiling.

Image source: Getty Images.

If anything, Berkshire should be worth more now

From a business perspective, it's tough to make the argument that Berkshire's intrinsic value is lower than it was on May 1 before Buffett made his announcement.

There are three major components of Berkshire Hathaway's business -- the cash stockpile, the operating businesses, and the stock portfolio.

First, the cash is about $3 billion lower than it was at the end of the first quarter, but that represents about 0.3% of Berkshire's market value. And in the second quarter earnings report, there was no cause for concern about the operating businesses -- in fact, everything besides insurance underwriting profits (which are lumpy over time) grew nicely.

That leaves the stock portfolio. Consider Berkshire's top stock positions and how they've performed in the months since Buffett's announcement:

Company (Ticker Symbol)

Total Return Since May 1

Apple (NASDAQ: AAPL)

9.9%

American Express (NYSE: AXP)

14.2%

Bank of America (NYSE: BAC)

18.3%

Coca-Cola (NYSE: KO)

(0.5%)

Chevron (NYSE: CVX)

15.4%

Moody's Corp (NYSE: MCO)

15.6%

Occidental Petroleum (NYSE: OXY)

10.8%

Data source: CNBC. Returns as of 8/13/25.

These are all of Berkshire's stock positions with a market value of $10 billion or more and represent nearly three-fourths of the entire stock portfolio. And the average return from this group is positive-12% since Buffett announced his retirement. It's fair to say that since Buffett made his announcement, the stock portfolio has gained tens of billions of dollars in market value.

The bottom line

To be completely fair, there's an argument to be made against buying Berkshire. For one thing, management didn't buy back any shares in the second quarter, despite the plunge after Buffett's announcement, which could suggest leadership still thinks the stock isn't a compelling value.

Plus, Berkshire's operating businesses aren't bad, but they aren't exactly industry standouts in many cases. For example, GEICO recently lost its No. 2 auto insurance market share to Progressive (NYSE: PGR), and Berkshire's management has acknowledged it has fallen behind when it comes to technology.

Having said that, Berkshire is still designed to be an incredible long-term compounding machine, and a new person in the CEO office, who has essentially been Buffett's understudy for years, doesn't change that. Berkshire is already one of my largest investments, and has been for some time, but I'm likely to add shares if this price level persists.

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American Express is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Matt Frankel has positions in American Express, Bank of America, and Berkshire Hathaway. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, Chevron, Moody's, and Progressive. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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