Warren Buffett to Step Down as Berkshire Hathaway's CEO: 7 Reasons the Ultimate Buffett Stock Is Still a No-Brainer Buy

The investment world is abuzz with news that Warren Buffett, the legendary investor and CEO of Berkshire Hathaway (BRK.A), will transition to the role of chairman, passing the CEO baton to Greg Abel. While the news marks the end of an era, the fundamentals of this conglomerate remain as strong as ever. For long-term investors, Berkshire Hathaway’s stock is still a compelling buy. Here’s why.

1. Smooth Leadership Transition: Greg Abel’s Proven Track Record

Abel, who has managed Berkshire’s railroad, utilities, and energy divisions for over a decade, is no stranger to the company’s operations. Under his leadership, Berkshire Hathaway Energy grew into a $50 billion enterprise. This continuity ensures minimal disruption, as Abel’s deep institutional knowledge aligns with Buffett’s long-term ethos.

2. Diversified Portfolio Resilience

Berkshire’s $300 billion portfolio spans industries from insurance (GEICO, Progressive) to manufacturing (BNSF Railway, Duracell) and consumer brands (See’s Candies, Dairy Queen). This diversification acts as a natural hedge against economic volatility.

3. Financial Fortitude: Cash Reserves and Debt Discipline

With $100 billion in cash reserves as of Q3 2023—up from $40 billion in 2017—Berkshire remains one of the world’s most liquid enterprises. Its conservative debt policy (total debt of $40 billion, less than 20% of equity) contrasts sharply with highly leveraged peers.

4. Long-Term Outperformance

Berkshire’s stock has delivered a 20% annualized return since 1965, outpacing the S&P 500’s 10% average. Even over the past decade, , BRK.A’s 12% annualized return still beats the broader market.

5. Underappreciated Intrinsic Value

Buffett’s “intrinsic value” thesis argues that BRK.A’s book value per share (now $486,000) grows at ~10% annually, yet the stock trades at a discount to this metric. Historically, Berkshire’s market cap has lagged its book value, creating a margin of safety.

6. Share Repurchases: Capital Returns in Action

While Berkshire hasn’t paid a dividend since 1962, it returned $16 billion to shareholders via buybacks in 2022. Abel has reaffirmed the commitment to repurchases when shares trade below intrinsic value, ensuring patient investors benefit.

7. Institutional Trust and Legacy

Berkshire’s brand equity is unmatched. Pension funds, endowments, and individual investors retain faith in its management’s ability to deploy capital wisely. This trust is reflected in Berkshire’s consistent inclusion in top 10 holdings of major institutional portfolios.

Conclusion: A Buy for the Long Run

Berkshire Hathaway’s stock remains a no-brainer buy for investors with a 5–10 year horizon. With a seasoned CEO in place, a fortress balance sheet, and a track record of compounding wealth, the company is positioned to thrive.

Key Data Points to Consider:
- Stock Price Performance: BRK.A has risen 35% since 2020, while the S&P 500 rose 45%—a gap narrowing as Buffett’s successor takes over.
- Dividend Potential: Though dividends are unlikely, buybacks and book value growth provide tangible returns.
- Valuation: At 1.2x book value (historical average: 1.5x), BRK.A offers upside as markets reassess its intrinsic worth.

The Buffett era’s end is a milestone, not an endpoint. With Abel at the helm and Berkshire’s moat intact, this remains one of the safest bets in the market.

Investment Thesis: Buy BRK.A for long-term growth, stability, and the enduring power of Berkshire’s portfolio.