As Berkshire Hathaway prepares for its most consequential leadership transition in decades, investor unease is beginning to show.
Warren Buffett’s decision to step down as CEO at year-end is already reshaping how markets view the conglomerate — and how advisors may need to frame Berkshire’s role in client portfolios.
The company’s third-quarter results, released Saturday morning, showed another strong performance in operating earnings and an ever-growing cash hoard. Yet for all the financial strength, sentiment toward Berkshire’s stock has shifted notably since Buffett’s May announcement.
From Peak to Pause
Two months remain before Buffett formally hands over the CEO role to Greg Abel, but the market appears to be pricing in uncertainty around the transition. Berkshire’s Class B shares, which closed just under $540 on May 2 — an all-time high — have since fallen 11.5%. That’s a marked reversal from earlier this year when the stock outperformed the S&P 500 by more than 22 percentage points. Today, Berkshire trails the benchmark by nearly 11 points, erasing most of that earlier edge.
Even with this pullback, the stock remains well above its early August low, but the volatility underscores how tightly investor confidence has long been linked to Buffett himself. For advisors who have positioned Berkshire as a core equity allocation — often as a proxy for a diversified, value-oriented portfolio — the shifting narrative around leadership and transparency is becoming a real consideration.
Analysts Turn Cautious
Keefe, Bruyette & Woods added to the chorus of concern last week, downgrading Berkshire’s Class A shares from “market perform” to “underperform” and trimming their price target from $740,000 to $700,000. The stock closed Friday at $715,740.
In their report, analysts Meyer Shields and Jing Li warned that “many things [are] moving in the wrong direction.” They cited a confluence of headwinds: GEICO’s likely peak in underwriting margins, declining reinsurance pricing, the drag from lower short-term rates, tariff pressures on BNSF Railway, and the potential expiration of certain renewable energy tax credits.
Perhaps most significant for long-term investors, they flagged what they called Berkshire’s “historically unique succession risk.” Without Buffett’s steady hand and unparalleled reputation, they argued, the company’s distinctive culture and lack of conventional corporate communication could become a liability. Berkshire’s long-standing refusal to issue earnings forecasts or hold analyst calls worked under Buffett — but that deference from Wall Street may not extend to Abel.
The “No Buffett Premium” Era
The Wall Street Journal captured the changing dynamic with a headline referencing Berkshire’s “New Normal … No ‘Buffett Premium.’” As KBW’s Shields put it, “There are people that have developed enormous confidence in Warren Buffett. For them, that’s where the investment thesis starts and stops.”
That confidence premium — the unquantifiable layer of trust Buffett has built with investors — may not survive the transition. Yet not everyone sees the handover as a cause for alarm.
Chris Bloomstran, president of Semper Augustus Investments Group and a longtime Berkshire shareholder, argues that the recent weakness reflects valuation, not leadership. “Berkshire was overvalued before the May meeting,” he told the Journal, noting that the stock’s year-to-date gain still outpaces peers such as Progressive, down 14% this year. Bloomstran has been adding to his position, saying that insiders have “nothing but rave reviews” for Abel.
Henry Asher, president of Northstar Group, echoes that view. “You’re not going to cancel your shipment on Burlington Northern because Buffett isn’t there,” he said. “The businesses will continue to produce mammoth amounts of cash flow, with or without Buffett.”
For advisors, this internal confidence matters. Abel, who has overseen Berkshire’s non-insurance businesses since 2018, is seen as operationally disciplined and culturally aligned with Buffett’s ethos. The portfolio’s durability — driven by companies such as BNSF, Berkshire Energy, and the insurance group — supports the argument that Berkshire’s intrinsic value doesn’t vanish with its founder’s retirement.
The Changing Voice of Berkshire
Another symbolic shift is coming soon: the annual shareholder letter. The Wall Street Journal confirmed that beginning next year, Greg Abel will take over authorship of the iconic missive, a cornerstone of Berkshire’s identity.
Buffett hinted at this earlier in 2025, writing in his last letter that “it won’t be long before Greg Abel replaces me as CEO and will be writing the annual letters.” The handover of this communication — part financial report, part philosophical essay — represents more than a change in tone. For many investors, the letter has been a roadmap for understanding value investing, corporate culture, and long-term discipline.
Buffett will still pen letters to his three children and to shareholders on November 10, coinciding with his annual philanthropic gifts to family foundations — a Thanksgiving tradition he began years ago. But the next era of Berkshire communication will belong to Abel, a shift that wealth advisors will want to watch closely as they gauge investor sentiment and messaging consistency.
Portfolio Moves: Trimming DaVita
In the meantime, Berkshire continues to quietly manage its vast portfolio. This week, the company disclosed the sale of 401,514 shares of DaVita, worth about $54 million. The dialysis provider’s stock fell roughly 8% after its third-quarter earnings missed expectations, with rising patient costs and lower treatment volumes pressuring results.
DaVita shares are down more than 20% year-to-date, but Berkshire’s latest sale is less a reaction to short-term weakness than compliance with an ownership cap. Under a 2024 agreement, Berkshire pledged to keep its stake at or below 45% of DaVita’s outstanding shares.
DaVita’s ongoing buybacks reduced total shares outstanding from 75.5 million to 70.6 million this quarter, which would have nudged Berkshire’s position above the 45% limit. The sale brings Berkshire’s stake back to precisely 45%, or about 31.8 million shares valued at roughly $3.8 billion. Similar trimming has occurred in recent quarters as Berkshire adjusts to DaVita’s capital management strategy.
For advisors, Berkshire’s precision here reflects its trademark discipline — an important reminder that while Buffett’s leadership era may be ending, the company’s operational and compliance rigor remains intact.
Looking Ahead
As the market digests Berkshire’s third-quarter report and the looming leadership transition, the company faces an unusual mix of stability and skepticism. The fundamentals — nearly $170 billion in cash, strong insurance earnings, and resilient operating businesses — remain solid. But sentiment, always a fragile commodity, is shifting as investors prepare for a future without Buffett’s direct involvement.
For RIAs and wealth managers, that shift creates both challenge and opportunity. Berkshire may no longer trade with a “Buffett premium,” but the underlying portfolio still represents one of the most diversified, cash-generative enterprises in the world. Advisors guiding clients through this transition period will need to balance respect for Buffett’s legacy with clear-eyed analysis of Abel’s leadership, the company’s evolving communication strategy, and how Berkshire fits within modern portfolio construction.
The “Buffett era” is ending, but the Berkshire model — disciplined capital allocation, decentralized management, and long-term value creation — remains firmly in place.
