Warren Buffett announced on Saturday that he plans to step down as Berkshire Hathaway's CEO at the end of 2025.
Berkshire's stock remains a great pick for long-term investors, in part because of its diversified and resilient business.
The conglomerate will also be in capable hands under Buffett's successor, Greg Abel.
The day that I and many other investors dreaded for years arrived on Saturday. Warren Buffett announced at Berkshire Hathaway's (NYSE: BRK.A)(NYSE: BRK.B) annual shareholder meeting that he plans to step down as CEO at the end of 2025. Buffett told shareholders that he had only revealed the news beforehand to his children, Howard and Susie, both of whom are members of Berkshire's board.
This announcement wasn't a complete surprise. Buffett, who celebrated his 94th birthday last August, wrote in his annual shareholder letter in February that "it won't be long" before he will no longer serve as the company's CEO. Still, his passing the baton will mark the end of an era.
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Does this mean that Berkshire Hathaway stock will no longer have the appeal it's had for decades? I don't think so. Here are seven reasons the ultimate Buffett stock is still a no-brainer buy.
Image source: The Motley Fool.
1. An incredibly diversified business
Berkshire Hathaway is almost like an exchange-traded fund (ETF), in my view. Consider that the conglomerate operates over 60 subsidiaries spanning nearly every major sector, from consumer goods to financial services to utilities.
In addition, Berkshire has significant investments in more than 40 other publicly traded companies. The list features some of the best businesses in the world: Apple, American Express, Coca-Cola, Chevron, Amazon, and more.
Buffett once wrote to Berkshire shareholders that most individuals should focus on investing in "a cross-section of businesses that in aggregate are bound to do well." He added, "A low-cost S&P 500 index fund will achieve this goal." I think Berkshire Hathaway stock will continue to achieve the goal over the long run, too.
2. A stable business
Buffett once said, "A ham sandwich could run Coca-Cola." By this, he meant that Coke's business is so stable that it can almost run itself. I think his statement is even more applicable to Berkshire itself because of the conglomerate's incredibly reliable business.
Insurance and energy remain Berkshire's core focuses; Berkshire's insurance operations generate dependable cash flow, and the demand for energy will continue to grow. Most of the company's other businesses are quite steady as well.
3. A solid succession plan
I don't think Buffett intended to imply that management isn't important; it is. The good news for Berkshire is that it has a solid succession plan. Buffett plans to ask the board to appoint Greg Abel as his successor as CEO.
Abel currently serves as chairman and CEO of Berkshire Hathaway Energy, and as vice-chairman of Berkshire's non-insurance operations. Buffett praised Abel on Saturday, saying, "Greg can do better at many things."
4. An enduring investment philosophy
Buffett's investment philosophy, which has made Berkshire so successful through the years, won't be abandoned. Abel will oversee the conglomerate's investments.
Buffett compared him to longtime Berkshire Hathaway vice-chairman Charlie Munger, who passed away in late 2023 at age 99, in the latest shareholder letter. He wrote: "Often nothing looks compelling; very infrequently we find ourselves knee-deep in opportunities. Greg has vividly shown his ability to act at such times as did Charlie." That's high praise, indeed.
5. A mountain of cash
Berkshire Hathaway revealed that it had roughly $348 billion in cash, cash equivalents, and short-term U.S. Treasuries at the end of the first quarter of 2025. That's the largest cash stockpile in the company's history.
Why does this mountain of cash make the stock an attractive investment alternative? Sooner or later, stock valuations will fall enough to entice Berkshire to put some of its money to work. When it does, the conglomerate will likely be able to invest in, to use Buffett's phrase, "wonderful companies at a fair price." Those investments should make Berkshire shareholders exceptional returns long after Buffett steps down.
6. A continued track record of aligning with shareholder interests
I can't think of any corporate CEO who has had a better track record of aligning with shareholder interests than Buffett. But I'm confident this track record will continue under Abel's leadership.
We already know that Abel will take over the shareholder letters that so many of us enjoy reading each year. Buffett wrote in the most recent shareholder letter: "Greg shares the Berkshire creed that a 'report' is what a Berkshire CEO annually owes to owners. And he also understands that if you start fooling your shareholders, you will soon believe your own baloney and be fooling yourself as well."
7. Buffett plans to stay involved with Berkshire
Last, but not least, Buffett plans to remain involved with Berkshire after he hands the reins over to Abel. He told shareholders on Saturday: "I would still hang around and could conceivably be useful in a few cases, but the final word would be what Greg said."
Importantly, Buffett also said he doesn't intend to sell any of his Berkshire Hathaway stock. The legendary investor knows a good thing when he sees it.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. American Express is an advertising partner of Motley Fool Money. Keith Speights has positions in Amazon, Apple, Berkshire Hathaway, and Chevron. The Motley Fool has positions in and recommends Amazon, Apple, Berkshire Hathaway, and Chevron. The Motley Fool has a disclosure policy.
