{"id":1533940,"date":"2025-05-03T19:45:00","date_gmt":"2025-05-03T23:45:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1533940"},"modified":"2025-05-03T19:45:00","modified_gmt":"2025-05-03T23:45:00","slug":"buffett-to-step-down-as-berkshire-ceo-at-year-end-as-cash-hoard-hits-record-348-billion","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/buffett-to-step-down-as-berkshire-ceo-at-year-end-as-cash-hoard-hits-record-348-billion\/1533940\/","title":{"rendered":"Buffett To Step Down As Berkshire CEO At Year-End As Cash Hoard Hits Record $348 BIllion"},"content":{"rendered":"

Buffett To Step Down As Berkshire CEO At Year-End As Cash Hoard Hits Record $348 BIllion<\/span><\/p>\n

\n

It’s the end of an era at America’s largest hedge fund\/private equity\/insurance float-cum-rollup <\/em>conglomerate, whatever you want to call it: Warren Buffett just announced during the Berkshire annual pilgrimage to Omaha that he is stepping down as CEO of Berkshire at the end of the year, <\/strong>and that Greg Abel, the vice chairman for non-insurance operations who has been groomed over the past decade for just this moment, will take over the conglomerate. The news was greeted with a standing ovation by the thousands of Berkshire shareholders who were present at Omaha’s Convention Center.<\/p>\n

I\u2019m not crying; you\u2019re crying.<\/p>\n

No standing ovation has ever been more well-earned\u2026 pic.twitter.com\/9xfgoLezKZ<\/a><\/p>\n

\u2014 Compound248 \ud83d\udcb0 (@compound248) May 3, 2025<\/a><\/p>\n

Buffett – whose track record cemented him, along his long-time sidesick Charlie Munger, into a celebrity billionaire renowned for his investing acumen and witticisms – built Berkshire Hathaway into a business valued at more than $1.16 trillion, generating compounded annual returns to shareholders at double the rate of the S&P (19.9% vs 10.4%), since 1965, and a staggering 5,502,482% overall gain on BRK stocks since 1964, vs “only” 39,054% for the S&P. His investing success\u00a0gave him the power to move stocks and helped him strike lucrative deals with\u00a0Goldman Sachs and\u00a0General Electric during times of crisis.<\/p>\n

<\/a><\/p>\n

The announcement stunned the board and even Abel, who, while long signaled as Buffett\u2019s successor, was unaware that the news was coming as the annual meeting drew to a close.<\/p>\n

\u201cThat\u2019s the news hook for the day,\u201d Buffett said. \u201cThanks for coming.\u201d<\/p>\n

Berkshire grew aggressively over the decades with Buffett as chairman and CEO, as he chose acquisitions and stocks for the company portfolio alongside trusted adviser and vice chairman, Charlie Munger, who died in 2023 at 99. As Bloomberg notes, “the conglomerate acquired a bewildering assortment of businesses, which Buffett often said mirrored the US economy as a whole. A bet on Berkshire, he said, was a bet on America.”<\/em><\/p>\n

Buffett started managing money when he was young, a disciple of Benjamin Graham\u2019s investing style. He moved more into the corporate world when his Buffett Partnership Ltd.\u00a0bought\u00a0shares of Berkshire. In 1965, he took control of the rest of the business.<\/p>\n

Composed mostly of struggling textile operations that would eventually fade away, Berkshire became the foundation for Buffett\u2019s modern-day giant. Piece by piece, he built and acquired operations into a varied set of industries, including insurance \u2014 which gave him cash, or \u201cfloat\u201d \u2014 to help his investing strategy.\u00a0<\/p>\n

Now, Berkshire owns businesses ranging from railroad\u00a0BNSF\u00a0to auto insurer\u00a0Geico, sprawling energy operations, and even retailers such as\u00a0Dairy Queen\u00a0and See\u2019s Candies. Its collection of companies generated\u00a0$47.4 billion\u00a0of annual operating earnings in 2024. Buffett also built up the stock portfolio \u2014 populating it with giant bets on the likes of\u00a0Apple Inc.\u00a0and\u00a0American Express\u00a0\u2014 and offering Berkshire another way to participate in the gains of businesses that it didn\u2019t fully own.<\/p>\n

* * *<\/p>\n

Ahead of today’s annual meeting with Berkshire’s faithful, the company reported Q1 results that showed a steep drop in operating earnings <\/strong>from the year-earlier period: operating earnings, which include the conglomerate\u2019s fully owned insurance and railroad businesses, fell 14% to $9.64 billion during the first three months of the year. In the first quarter of 2024, they totaled $11.22 billion. On per share basis, operating earnings were $4.47 last quarter, down from $5.20 a year ago, and below the $4.72 consensus forecast.\u00a0\u00a0<\/p>\n

Much of the company’s decline was driven by a 48.6% plunge in insurance-underwriting profit, <\/strong>which came in at $1.34 billion for the first quarter, down from $2.60 billion a year prior, and was mostly due to the Southern California wildfires which led to a $1.1 billion loss in Q1.<\/p>\n

Berkshire\u2019s bottom line also took a hit from the dollar losing value in the first quarter. The company said it suffered an approximate $713 million loss related to foreign exchange. This time last year, it benefited from a $597 million forex gain. The dollar index fell nearly 4% in the first quarter. Against the Japanese yen, it lost 4.6%.<\/p>\n

The company\u2019s overall earnings plunged nearly 64% year over year, as Buffett\u2019s portfolio of publicly traded names took a hit to start the year. As is well-known, Berkshire always advises investors to look past these quarterly changes: \u201cThe amount of investment gains (losses) in any given quarter is usually meaningless and delivers figures for net earnings per share that can be extremely misleading to investors who have little or no knowledge of accounting rules,\u201d Berkshire\u2019s release said.<\/p>\n

Berkshire said Donald Trump\u2019s tariffs and other geopolitical risks created an uncertain environment for the conglomerate, owner of BNSF railway, Brooks Running and Geico insurance. While the firm said it\u2019s not able to predict any potential impact from tariffs at this time, it warned that tariffs may further hit profits.<\/p>\n

\u201cOur periodic operating results may be affected in future periods by impacts of ongoing macroeconomic and geopolitical events, as well as changes in industry or company-specific factors or events,\u201d Berkshire said in the earnings report. \u201cThe pace of changes in these events, including international trade policies and tariffs, has accelerated in 2025. Considerable uncertainty remains as to the ultimate outcome of these events. We are currently unable to reliably predict the potential impact on our businesses, whether through changes in product costs, supply chain costs and efficiency, and customer demand for our products and services” it said.<\/p>\n

During the annual meeting, Buffett also addressed Trump\u2019s tariff policies at the company\u2019s annual meeting in Omaha, saying trade \u201cshould not be a weapon.\u201d\u00a0<\/p>\n

\u201cYou can make some very good arguments for the fact that balanced trade is good for the world,\u201d Buffett said in response to a question about trade barriers. \u201cThere is no question that trade can be an act of war.\u201d\u00a0He added that the US \u201cshould be looking to trade with the rest of the world.\u201d Which, obviously is what Trump is trying to do, just on far better terms than effete US leadership had accepted gradually over the past few decades.<\/p>\n

\u201cBalanced trade is good for the world. And the more balanced that trade is, the better.\u201d<\/p>\n

– Warren Buffett\u2026<\/p>\n

\u2026distinguishing between his idea for Import Certificates vs standard Tariffs, which he believes can be destabilizing and war-like antagonism. pic.twitter.com\/DFWPPGoORz<\/a><\/p>\n

\u2014 Compound248 \ud83d\udcb0 (@compound248) May 3, 2025<\/a><\/p>\n

Continuing a familiar trend, in the first quarter, Berkshire\u2019s cash hoard ballooned to a fresh record, rising to more than $347 billion <\/strong>from around $334 billion at the end of 2024, as the company now holds a record $305.5 billion in Treasury Bills,<\/strong> which to CNBC showed “that Buffett did not use the first-quarter drop in the stock market to deploy the money.” Which, of course, was to be expected since the stock market dropped sharply only at the start of the second quarter.<\/p>\n

Buffett on markets, cash, portfolio management, and opportunism.<\/p>\n

\u201c I wouldn\u2019t do anything nearly so noble as to withhold investing myself just so Greg can look good later on.\u201d<\/p>\n

– Warren Buffett\u2026<\/p>\n

\u2026on the conspiracy that he\u2019s built $330 billion of cash to give a blank sheet\u2026 pic.twitter.com\/Bty6OdP5Qs<\/a><\/p>\n

\u2014 Compound248 \ud83d\udcb0 (@compound248) May 3, 2025<\/a><\/p>\n

During the pandemic, Buffett was stymied on the dealmaking front due to high valuations for good businesses, leaving a swollen cash pile and few attractive opportunities to put money to work. Instead of deals, Buffett aggressively leaned into share buybacks to deploy capital, though he broke with that trend by completing a $11.6 billion acquisition of Alleghany Corp. in 2022.<\/p>\n

Last year, he decried a lack of meaningful deals that would give the firm a shot at \u201ceye-popping performance\u201d as Berkshire\u2019s cash pile hit yet another record. The few US companies capable of moving the needle at Berkshire had already been \u201cendlessly picked over by us and by others,\u201d he said.\u00a0Since then, as the billionaire cut his stakes in Apple and Bank of America while refraining from making major deals, Berkshire\u2019s cash pile kept piling up, reaching $347.7 billion as of March 31.<\/strong><\/p>\n

<\/a><\/p>\n

Meanwhile, Berkshire continued to be a net seller of stocks for a 10th quarter in a row, although at a far slower pace, selling just a net $1.5BN in stocks, down sharply from the $6.7BN in Q4 and from the record $75.5BN in Q2 2024.<\/p>\n

<\/a><\/p>\n

The report comes as Berkshire enjoys a stellar year-to-date performance, while the broader market languishes. In 2025, Class A shares of Berkshire are up nearly 19%, while the S&P 500 is down 3.3% as uncertainty from tariffs pressures tech and other sectors. Not surprisingly, with the stock surging to a new all time high, for the third quarter in a row, Berkshire did not repurchase any of its\u00a0 own stock.<\/p>\n

<\/a><\/p>\n

Despite Buffett\u2019s large following, his day-to-day management of Berkshire was simple. He long favored a decentralized management approach, allowing the heads of Berkshire\u2019s various businesses to run the operations how they deemed fit and checking in on the operations every now and then.<\/p>\n

Buffett considered one of his more important roles to be a capital allocator for Berkshire, figuring out where the money should go, and reportedly spent a lot of time reading in his corporate office in Omaha. That office had just 27 employees as of last year.<\/p>\n

\u201cBuffett\u2019s decision to limit his activities to a few kinds and to maximize his attention to them, and to keep doing so for 50 years, was a lollapalooza,\u201d Munger said in an annual letter. \u201cBuffett succeeded for the same reason Roger Federer became good at tennis.\u201d<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nSat, 05\/03\/2025 – 15:45<\/span><\/p>\n

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