Berkshire Hathaway (NYSE: BRK.A, BRK.B) shares have fallen sharply since CEO Warren Buffett announced his decision to step down, significantly underperforming the broader market.
By press time, BRK stock was trading at around $490, down more than 8% since early May, while the S&P 500 has gained roughly 18%. The nearly 28-percentage-point gap highlights the shift in sentiment toward the conglomerate since Buffett revealed his succession plans.
The legendary investor confirmed during Berkshire’s annual shareholder meeting on May 3 that he will retire as CEO at the end of 2025, handing the reins to Vice Chairman Greg Abel.
Buffett, 94, expressed full confidence in Abel’s leadership, insisting the company’s prospects were “better under Greg than under me.”
Markets, however, have reacted with skepticism. Berkshire’s shares have steadily trailed the S&P 500 since the announcement, with the gap widening in October as investors reassessed the company’s valuation and growth outlook.
End of Buffett premium?
Analysts attribute much of the weakness to the fading of the “Buffett premium”, the long-standing boost in Berkshire’s share price tied to Buffett’s unrivaled reputation as an investor.
For more than six decades, Buffett’s capital allocation skill and disciplined approach transformed Berkshire into a trillion-dollar powerhouse. But with his departure on the horizon, investors are questioning whether that track record can continue without him at the helm.
Beyond sentiment, structural challenges are also weighing on the stock. Berkshire’s massive size and cash reserves make it increasingly difficult to find acquisitions large enough to drive growth, while its heavy exposure to insurance, utilities, and railroads has left it lagging the tech-driven rally powering the broader U.S. market.
Still, Buffett’s continued presence as chairman offers a degree of stability.
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