Warren Buffett has been the CEO of Berkshire Hathaway (BRK.A 0.41%)(BRK.B 0.62%) for decades. But at the end of this year, the 95-year-old investor will finally be stepping down and retiring. He has built up an iconic company that's worth over $1 trillion -- a rarity for a non-tech business.
It's only natural to wonder about what comes next for the business, and whether the stock can continue to be a good buy moving forward. After all, Berkshire has been synonymous with Buffett. If he's taking a backseat and no longer running the business as he has for years, then there may be justifiable reasons for investors to be worried about the path forward.
Can Berkshire Hathaway still be a good buy after Buffett steps down, or is now the time to consider selling the stock?
Image source: Getty Images.
Succession planning has been going on for years
Given Buffett's advanced age, there have been concerns about who will take over Berkshire Hathaway for years. The billionaire investor has been highly successful at beating the markets with a fair bit of consistency, and whether the next CEO will be able to do as well is a big question mark for Berkshire shareholders.
Buffett's longevity has helped with the succession process to ensure that Berkshire has a management team reflective of his values and a worthy successor who's ready to go. That successor is Greg Abel, who will be taking over as CEO at the start of 2026. Abel was revealed as the successor back in 2021, but now there is a definitive time frame as to when the switch will actually take place. The late Charlie Munger, Buffett's right-hand man, said that with Abel as the CEO, the company would be able to "keep the culture," suggesting that Abel likely has a similar outlook and approach to Buffett.
A change in CEO may not necessarily have an adverse effect on the business
Many stocks these days do well in large part because of their CEOs, and investors believing in their visions for the future. Tesla CEO Elon Musk is a prime example of that. Take Musk out of the equation and Tesla's valuation could sink drastically overnight. Investors may be concerned the same could happen with Berkshire when Buffett leaves.
But Berkshire isn't a tech company that's focused on innovating products. Its approach is calculated and steady, rather than aggressive. One example that may provide comfort is Apple. The company's visionary Steve Jobs died in 2011 and he had a Musk-like aura around him, being known for innovation and making Apple one of the most popular tech companies in the world. Tim Cook has taken over, and while the company isn't as innovative as it once was, he has still led the business to being one of the most valuable in the world, with a market cap of $4 trillion that is second only to chipmaking giant Nvidia, which is worth $4.6 trillion.
As concerning as a change in CEO may be at the time it occurs, investors should remember that they're investing in a business, not just an individual. Good CEOs surround themselves with excellent management teams, and put controls and policies in place to ensure that even if they aren't there, the company can continue to do well.
NYSE: BRK.B
Key Data Points
Berkshire could actually make for an underrated long-term buy
Although there may be uncertainty with how Berkshire will do after Buffett is no longer the CEO, I believe there can be opportunities to make the business even better. Berkshire's portfolio, for instance, involves positions in slow-growing companies such as Kraft and Coca-Cola, which are among its largest positions. A bit of a shake-up at the top could prove to be a welcome change and lead to better returns for the business.
Even if that doesn't happen, however, investors don't need to worry that the company is going to be in danger. At the very least, it should continue to grow and progress as it has for years to come. Berkshire trades at 16 times its trailing earnings, which is cheap compared to the S&P 500 average of around 26. For one of the most iconic businesses in the world, that's a very reasonable premium to pay, which is why I think the stock looks like a solid buy.
