Warren Buffett Taps Greg Abel as His Successor. What Investors Need to Know

It's quite rare to come across major storylines related to the business world during the weekend. If a corporation, especially a public company, has something important to announce, it generally does so during the workweek. In many ways, these updates and the speculative narratives around them are what cause share prices to move.

But on Saturday, May 3, investors all around the world were hit with perhaps the biggest financial storyline of 2025 so far. And guess what? It had nothing to do with artificial intelligence (AI) or tariffs.

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Of course, I'm talking about a major announcement made by Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) CEO Warren Buffett. Over the weekend, Berkshire held its annual investor conference. Per usual, investors worldwide gathered around and eagerly hung on Buffett's last word. Some lucky attendees even got the chance to speak to the Oracle of Omaha and ask him questions.

Image source: The Motley Fool.

While this is all par for the course for Berkshire's annual shareholder meeting, Buffett surprised everyone by announcing his intention to step away from the CEO role by year's end. During this announcement, Buffett made it clear that his choice as successor would be Greg Abel, who currently leads Berkshire's noninsurance side of the portfolio.

With such a major change in the works, investors are likely wondering what may be in store for Berkshire's future. Let's explore Abel's experience prior to and during his tenure at Berkshire and assess whether investors should buy the stock in the post-Buffett era.

Who is Greg Abel?

While Abel got his start in the financial services industry as an accountant at PwC, he isn't particularly known as a stock picker like Buffett's other top lieutenants, Todd Combs and Ted Weschler. Rather, Abel is more of an operator, understanding how to put together complex deals, integrate management teams, and build more efficient processes to drive profitability.

In the early 1990s, Abel left the financial services world for a job at electricity company CalEnergy. By 1999, CalEnergy had transformed into a global operation and bolstered its size through the acquisition of MidAmerican Energy. Later that year, Berkshire Hathaway acquired MidAmerican Energy. In the mid-2000s, Abel became CEO of MidAmerican Energy, which eventually rebranded to Berkshire Hathaway Energy (BHE) in 2014.

Warren Buffett's tenure at Berkshire has been legendary

Since Buffett took over at Berkshire in 1965, the company's shareholder returns have been so good it's almost hard to fathom. Between 1965 and 2024, Berkshire posted compounded annual gains of 19.9% -- nearly double that of the S&P 500 (SNPINDEX: ^GSPC). The stock's overall gain over the course of these nearly six decades is 5,502,284%. By comparison, the S&P 500 generated a total return of 39,054% during the same period. While Buffett receives a lot of the credit for these returns, it's important to understand that he did not build Berkshire's portfolio alone.

Since Abel joined Berkshire's leadership team in 2008, he's been involved in several high-profile transactions across utilities, real estate, natural gas, and other components of the energy sector. Back in 2008, Berkshire was generating about $14 billion in revenue from its utility and energy businesses. Today, BHE is operating at an annual revenue run rate of $25.4 billion and is on pace to generate $4.4 billion in profits.

Is Berkshire Hathaway stock a buy?

Currently, Berkshire stock trades at a modest price-to-earnings (P/E) multiple of just 13.7, roughly half the average P/E across the S&P 500 index.

My hunch is that investors may continue to discount Berkshire's potential now that new leadership appears to be in the making. Investors dislike uncertainty, and from a distance, Berkshire's future may look cloudy. I don't necessarily see things that way, though.

As of the end of the first quarter, Berkshire held a record $347.7 billion of cash and short-term investments on its balance sheet. If you follow Buffett's moves religiously, you're not surprised by this cash stockpile. The Oracle has been selling stock in droves for a while now, unlike many other money managers who have been chasing lofty valuations in the red-hot S&P 500 and Nasdaq Composite (NASDAQINDEX: ^IXIC).

BRK.B Cash and Short Term Investments (Quarterly) data by YCharts.

Unless Berkshire decides to start putting money to work at an aggressive clip between now and December, Abel will take over the firm with a generous sum of cash. While I'm not suggesting Berkshire will completely change its identity and begin buying high-flying growth stocks (very unlikely), I do think Abel is in a position to replicate his growth template from BHE across the broader Berkshire portfolio.

Right now, I think Berkshire Hathaway stock is a bargain, and I see this as a great opportunity to buy the stock as Abel prepares to take over as CEO.

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Adam Spatacco has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.