'Father Time Always Wins': Warren Buffett Steps Down as Berkshire Chairman After 56 Years

Berkshire Hathaway Inc. (NYSE:BRKA)(NYSE:BRKB) announced today that, at 96, Warren Buffett is finally stepping down as chairman of the board after 56 years in the role, effective immediately. In the letter thanking shareholders and explaining his reasoning, the "Oracle of Omaha" remarked, "Father Time always wins."

His son Howard Buffett will take over, while Warren becomes chairman emeritus and remains on the board. Greg Abel remains CEO after taking the reins earlier this year.

Buffett's long career

Here's a look at the legendary investor's storied career.

• 1965-Buffett buys Berkshire, a textile manufacturer in decline. He spent the next 20 years trying to turn it around, but never succeeded.
• 1967-Berkshire buys National Indemnity, its first insurance company. This is the beginning of the defining financial mechanism that helped make the company what it is today. Buffett was able to invest the insurance float -- the premium dollars an insurer has access to before it has to pay policyholder claims -- maximizing returns.
• 1970-Buffett becomes chairman of the board.
• 1988 and 1989-Buffett starts buying up Coca-Cola, accumulating a sizable stake. Coke is maybe the cleanest example of the kinds of companies Buffett looks for: easy to understand, a dominant brand, and a product people keep buying through almost any economic environment. The stock remains a core holding.

• 1996 to 2000-Berkshire bought GEICO, the reinsurer General Re, and MidAmerican Energy. It was this period that built the massive operational side of the business into much of what it is today.
• 2008 to 2011-Buffett helped several major institutions through the great financial crisis, investing billions in Goldman Sachs and Bank of America. The cash infusions, as well as the vote of confidence from Buffett, helped these companies weather the storm, while netting Berkshire an incredible return in a matter of years.

Buffett and Abel have been preparing for years

This is a big moment for the company, but it's more symbolic than anything, and it's probably less dramatic than it might appear. This is a transition years in the making, and the most distinct break happened months ago when Greg Abel stepped into the role of CEO.

Abel spent years under Buffett's tutelage and has been a part of key decisions long before he was officially calling the shots. And in his short tenure at the helm, he has, according to Buffett, already exceeded the "sky-high" expectations set for him. The company's second-quarter operating earnings rose 16% year over year to nearly $13 billion.

Abel has also put more of the enormous cash pile Buffett left him to work. The company renewed in earnest its practice of stock buybacks to the tune of about $4.8 billion. And Abel oversaw a major purchase of Alphabet stock.

Buffett's son will steward the culture

While Abel is responsible for the operations of the company and its investments, Howard Buffett will serve to maintain Berkshire Hathaway's core approach to doing business, acting as an insurance "policy the shareholders own and hope never to claim against" -- a steward of the culture that helped turn a struggling New England textile company into one of the largest and most influential companies on the planet.

Howard has served on Berkshire's board since 1993, giving him a 33-year apprenticeship.

What will Abel do now?

I think that while Friday's announcement is interesting from a human interest standpoint, it shouldn't change much for long-term investors. The same questions remain at the fore: what will Abel do with Berkshire's $365 billion war chest? And long-term, can Abel command the same leverage as Buffett when making deals? Warren Buffett's legendary reputation often meant better terms. Investors should watch to see if this sort of reputational discount holds.

Bank of America is an advertising partner of Motley Fool Money. Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Berkshire Hathaway, and Goldman Sachs Group. The Motley Fool has a disclosure policy.