Berkshire’s new normal: No Buffett shareholder letter and no ‘Buffett premium’

Warren Buffett still has a couple months left as Berkshire Hathaway’s chief executive. The company’s shares are already feeling his absence.

- Krystal Hur [e-mail]

Warren Buffett in May revealed plans to hand off his CEO duties to Greg Abel, his handpicked successor, at the end of this year.

(AFP)

Buffett, 95 years old, stunned investors at Berkshire’s shareholder meeting in May when he revealed his plans to hand off his CEO duties to Greg Abel, his handpicked successor, at the end of this year.

The succession plan will also bring big changes to several treasured traditions for Berkshire watchers, many of whom treat Buffett’s words of wisdom on business and investing as gospel. Abel will take over writing the annual letter to Berkshire’s shareholders, Buffett's assistant confirmed to The Wall Street Journal, and will lead Berkshire’s annual meeting in Omaha, Neb. Starting next year, Buffett, still chairman, will sit with the company’s other directors.

There is another consequence to Buffett’s retirement, especially to Berkshire shareholders, and it is already happening: Berkshire is losing its “Buffett premium,” or the higher price investors are willing to pay to own Berkshire’s stock thanks to the longtime chairman and CEO's presence.

Berkshire’s Class B shares have declined 11% since the May meeting, in part on concerns about how Berkshire will manage without Buffett, some analysts say. In comparison, the S&P 500 index has gained 20% during that stretch. For the year, Berkshire shares are underperforming the benchmark index by the widest margin since 2020.