Warren Buffett announced Monday he will step down as chief executive of Berkshire Hathaway after leading the conglomerate for 60 years. The announcement came during the company's annual meeting in Omaha.
Mr. Buffett indicated his plan is to depart by year end. Greg Abel, who has been overseeing non-insurance operations, is set to assume the chief executive role.
The moment occurred late in the shareholder gathering at the CHI Health Center. Many in the audience reacted emotionally to the news of the long-expected transition.
Berkshire Hathaway shares experienced declines Monday following the announcement, with Class A shares dropping nearly 4%. The stock price slides reflect expectations that a "Buffett premium" built into the valuation could diminish as he transitions from the CEO role.
The market reaction also follows Berkshire's first-quarter results, which showed a 14% decline in operating earnings, driven partly by a drop in insurance underwriting profit.
Mr. Abel addressed shareholders, stating his intention to continue Berkshire's patient value investing strategy and maintain the company's substantial cash reserves, emphasizing the "fortress of a balance sheet." Mr. Buffett noted Abel's more hands-on managerial style works well for the company's numerous subsidiaries.
Mr. Buffett will continue as chairman of the board and reiterated he will not sell his shares, which are planned for distribution over the next 10 to 15 years.
Questions remain about the future roles of investment managers Ted Weschler and Todd Combs, and how the company will handle its large cash position. Some analysts suggest the transition may prompt calls for improved corporate disclosure practices.
"There will not be another Warren Buffett in my lifetime, but Greg Abel doesn't need to be Warren Buffett or Charlie Munger," said Bill Stone, CIO at the Glenview Trust Company and a Berkshire shareholder. "He inherits a Berkshire Hathaway, which owns some outstanding businesses and a Fort Knox balance sheet."
