The end of the year is fast approaching, and for Berkshire Hathaway (BRK.A 0.33%)(BRK.B 0.33%) shareholders, that means one important thing: Their company will have a new CEO. Warren Buffett, who has been at the helm of Berkshire for decades, is finally retiring. The billionaire investor has enjoyed a remarkably successful career, which will finally draw to a close.
Losing its visionary and long-term leader will obviously be a blow for the company. But what does it all mean for Berkshire, and could the stock still be a good buy in 2026 when Greg Abel takes over?
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Berkshire's had a succession plan for nearly 20 years
Buffett's longevity has been a blessing for Berkshire shareholders as it has given the company plenty of time to prepare for a successor. In some companies, resignations and retirements in the CEO position can come without much warning, leaving a business in a sudden rush to fill it.
That can result in a less-than-ideal candidate. However, with Berkshire, succession plans have been in place since at least 2006. While they've likely changed over that time, this is clearly not an event that will catch the company unprepared.
Investors have also known since 2021 that it would be Abel who would likely be taking over the reins from Buffett. Abel's been with the business for over 25 years and is well prepared to take on the role as CEO in the coming weeks.
The odds are that, with plenty of time under Buffett's wing, Abel's approach won't differ a lot from his predecessor's. But that doesn't mean there won't be notable changes in Berkshire's portfolio.
Why significant changes in the stock portfolio could be inevitable
Two investors could have the same investing strategy and approach, but also have different competencies, skills, and knowledge that draws them to different types of stocks. Abel, for instance, may target different companies than Buffett might, while still focusing on fundamentals, competitive moat, and other Buffett-like principles of investing.
Investors may have gotten a glimpse of that already when Berkshire disclosed a position in tech-giant Alphabet back in November. It wasn't a typical Buffett move, as he usually avoids the sector. It was unclear who was behind the decision, but it was certainly a notable one.
While there have been tech stocks in Berkshire's portfolio in the past, large tech purchases haven't been the norm. And Alphabet has now become one of Berkshire's largest holdings, accounting for a little less than 2% of its overall positions.
Apple remains the top holding at nearly 21%. While you might consider it a tech stock, over the years, it has resembled more of a consumer goods company focused on stable and consistent growth, rather than constant innovation. Alphabet may have been the first big change in Berkshire's portfolio and could be a sign of things to come, including a greater focus on tech.
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Key Data Points
Is Berkshire still a good stock to own in 2026?
Berkshire's stock is up 12% this year and trades at a price-to-earnings multiple of 16, which isn't high when compared to the S&P 500's average of 26. It may trade at more of a discount once Buffett leaves, but I believe that over time, as Berkshire continues to perform well and Abel makes solid additions to the portfolio, it will lead to more of an increase in the company's share price.
I'm also cautiously optimistic that under new leadership, the company may focus more on growth stocks and pivot away from slow-growing investments like Kraft Heinz, which has offered not much besides a dividend in recent years.
Overall, I see Berkshire's stock continuing to be an excellent buy for not only next year but over the long term, as well. If it dips in value after Buffett leaves, that would simply make it an even more attractive investment to buy.
