Like many investors around the world, I own Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) shares in my investing portfolio. And, like I suspect all of those shareholders, I am not looking forward to the imminent retirement of Berkshire's CEO, and patron saint, Warren Buffett.
Earlier this year, Buffett surprised investors (to the extent that a 95-year-old can) with the announcement of his retirement at the end of 2025. Buffett is set to step down as CEO of Berkshire on 1 January 2026, to be replaced by long-time lieutenant Greg Abel.
It's a momentous changing of the guard at Berkshire, which cannot be understated. Buffett has been CEO at the sprawling conglomerate since the early 1960s. Over that time, he rebuilt Berkshire Hathaway, with the help of the late Charlie Munger, from a failing textiles company to the US$1.1 trillion company it is today. That success was enabled by a compounded rate of return that is estimated to be about 20% per annum over those many decades – an unrivalled achievement in financial history.
Almost every person who has bought Berkshire Hathaway stock in living memory has probably done so to try and hitch their financial wagons to that of Buffett. That includes this writer. After all, the track record has been there for all to see.
But this spectacular era of American capitalism is sadly drawing towards its inevitable conclusion. Sure, Buffett has promised to remain as chairman of Berkshire. But no one can deny that this is the dawning of a new era for Berkshire.
So, as we approach the final month of Buffett's decades-long stint as Berkshire's CEO, is it a good time to sell out of the company that he built?
With Buffett retiring, is it time to sell Berkshire stock?
Well, I don't think so. I personally don't plan to offload my shares anytime soon, anyway.
There are two reasons why I will continue to hold Berkshire in my portfolio.
The first is its nature. Although Buffett is stepping down from the top of Berkshire, his investments will remain. Warren Buffett has built his success on picking the very best businesses for Berkshire's portfolio, and holding them indefinitely. They famously include Coca-Cola Co (NYSE: KO), American Express Co (NYSE: AXP), Apple Inc (NASDAQ: AAPL), and more recently, Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL). But those are just some of the public ones. In addition, Berkshire owns a bevy of private companies outright. These include Duracell, Dairy Queen, See's Candies, BNSF Railway, and Geico.
Buffett picked these companies for a reason, and on the assumption that they will continue to pour ever-rising profits into Berkshire's coffers. This is Buffett's legacy that I think will continue to deliver long after he steps off the stage.
Secondly, it's my view that Buffett has set the company up well for success. The succession plan has been in the works for years and has the legendary investor's full approval (and influence). Although I'd wager every shareholder would be keen to see Buffett remain at the helm until Judgement Day, this is the next-best option in my view.
Here's some of what Buffett has said on the succession himself:
I would leave the capital allocation to Greg and he understands businesses extremely well. If you understand businesses, you'll understand common stocks… I think the prospects of Berkshire will be better under Greg's management than mine.
Abel has also stated that:
It's really the investment philosophy and how Warren and the team have allocated capital for the past 60 years. Really, it will not change. And it's the approach we'll take as we go forward.
Although I am sad to see Buffett step away from the company he built from almost nothing, I am confident that its future is rosy. As such, I won't be selling my shares anytime soon.
