Berkshire Hathaway (BRK.A +0.16%)(BRK.B +0.14%) has been one of the more interesting stock market stories of 2025. When the S&P 500 briefly plunged into bear market territory in April after the president's reciprocal tariff announcements, Berkshire held up quite well. In fact, Berkshire's stock reached a fresh all-time high a few weeks later and as of early May was one of the best-performing large cap stocks in the market.
However, at Berkshire Hathaway's annual meeting, legendary investor and CEO Warren Buffett dropped a bombshell on investors and announced that he intends to step down at the end of the year. In just over a month since that time, Berkshire has lost more than 10% of its market value.
Historically, a 10% correction in Berkshire Hathaway stock has been an excellent time to buy. However, this time looks a little different. For one thing, even after falling 10%, Berkshire is still beating the S&P 500 over the past year. Second, is Berkshire a good buy even without Warren Buffet?
There are two things to unpack here:
- Can Berkshire still be a great investment in the post-Warren Buffett era?
- With a valuation of more than $1 trillion, even after a 10% decline, is Berkshire attractively valued as a business?
To be sure, these are somewhat a matter of opinion. But let's try to answer both of these questions.
Image source: Getty Images.
What changes when Buffett steps down?
First, it's important to acknowledge that there's a lot that won't change when Buffett steps down. Just to name a few key points:
- Each of Berkshire's subsidiary businesses has its own management team, and there's very little oversight from Berkshire's corporate office.
- After Buffett steps down, new CEO Greg Abel will still oversee the company's non-insurance operations, and Vice Chairman Ajit Jain will still preside over the insurance businesses.
- Investment managers Ted Weschler and Todd Combs will still help allocate money in the stock portfolio.
- Buffett is planning to remain in an executive chairman role, so he still has significant influence.
Arguably, the biggest changes will be that Greg Abel, not Buffett, will have final say over what the company does with its nearly $350 billion cash stockpile, and Buffett won't be picking stocks in the portfolio.
NYSE: BRK.B
Key Data Points
However, I'd push back on the fact that these will be major changes. Abel knows Buffett's capital deployment strategies better than anyone and will use the same general investment framework in place now. And with the stock portfolio, Weschler and Combs have established an excellent track record. In fact, one of them was initially responsible for Berkshire's Apple (AAPL +2.08%) investment -- its most successful of all time.
Berkshire's valuation (short version)
There are three main parts of Berkshire Hathaway: its operating businesses, its stock portfolio, and its cash. The latter two are very straightforward to value.
As of the latest information, Berkshire has about $348 billion in cash and short-term investments, and its stock portfolio has a market value of $279.4 billion. Subtracting these from its market cap of $1.049 trillion shows that the company's operating businesses are valued at $421.6 billion.
Over the past four quarters, excluding investment income, Berkshire's operating profit has been about $33 billion. This means that Berkshire's businesses are trading for an exceptionally low valuation of less than 13 times earnings despite being a largely recession-resistant collection of companies with reliable cash flow.
Of course, this valuation is a bit of an oversimplification. Berkshire's subsidiaries are a diverse collection of different industries, growth rates, and business dynamics, and looking at the price-to-earnings (P/E) multiple for any investment is just one piece of the valuation puzzle. But the point is that despite its trillion-dollar valuation, Berkshire isn't as expensive of a stock as you might assume.
The bottom line
At a share price of about $488 as I'm writing this, Berkshire isn't as attractive as it was a year ago when its share price was 20% lower. But there are some good reasons for the strong performance, and the reality is that the business isn't going to change as much as you might think after Buffett steps down, and a 11% decline in the stock seems to be a bit of an overreaction. After all, Buffett turns 95 this year, so although the announcement was unexpected, the fact that he won't be at the helm much longer really shouldn't be a surprise.
Berkshire Hathaway is one of my largest stock investments and one I've added to many times over the decade or so I've held it. I have absolutely no plans to sell a single share, and although I have no clue what Berkshire's stock price will do over the coming weeks or months, there's a solid case to be made that this is a buying opportunity for long-term investors.
