Morningstar

Berkshire Hathaway: Board Unanimously Appoints Greg Abel as Firm’s Next Chief Executive

We’re maintaining our fair value estimate of Berkshire stock, and still see shares as overvalued.

Berkshire Hathaway logo on cellphone.
Associated Press/Igor Golovniov
Securities in This Article
Berkshire Hathaway Inc Class A
(BRK.A)
Berkshire Hathaway Inc Class B
(BRK.B)

Morningstar’s Metrics for Berkshire Hathaway

With the company’s board of directors voting unanimously this past weekend to appoint Greg Abel as Berkshire Hathaway’s BRK.A/BRK.B next CEO, we are witnessing the end of an era for the business Warren Buffett was instrumental in building over the past 60 years.

Why it matters: Buffett’s retirement announcement was a shocker for not only investors but also board members and even Abel himself. It does, however, set up a more orderly leadership transition than we had been expecting for the firm.

  • Buffett has been chairman and CEO of Berkshire for six decades, having built the company with Charlie Munger, his longtime confidant, over the years.
  • While the announcement gives shareholders some time to digest the news, it will also increase the scrutiny on Abel, who will have to be both operator and investor in his new role.
  • Buffett expects to be around and “useful in a few cases,” but he did note that the final word on operations and capital deployment will be Abel’s. Buffett will maintain his role as chairman of the company’s board of directors.

The bottom line: With Buffett turning 95 this year and Munger having passed away in November 2023, there had been a heightened focus on succession lately. The announcement and board vote have laid out a clearer timeline of transition for shareholders.

  • We expect the focus to now turn from Buffett’s departure to the actual nuts and bolts of Berkshire’s operations, some of which we feel need to improve, and the company’s bloated balance sheet.
  • In our view, Abel will be held to a different standard than Buffett, with a greater focus on how well Berkshire is performing—especially with it being likely that there will be some churn in the company’s shareholders as we move past the end of an era.
  • Trading at an 11% premium to our $730,500 ($487) per Class A (B) share fair value estimate on Friday, May 2, we view Berkshire as modestly overvalued, given its low Uncertainty Rating.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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