By Theron Mohamed | July 13, 2025

Berkshire Hathaway Shares Tumble as Buffett Plans Exit

Berkshire Hathaway—long regarded as the epitome of value investing under the stewardship of Warren Buffett—has seen its stock decline by 11% since Buffett announced he will step down as CEO at the end of 2025. The drop has prompted widespread debate on Wall Street and within the investing community as to whether this retreat signals the loss of the legendary “Buffett premium,” or instead reflects other market and industry factors.

Buffett’s Impact: The Origins of the ‘Buffett Premium’

For more than 60 years, Warren Buffett has been synonymous with Berkshire Hathaway. Turning the once-struggling textile company into a $1 trillion conglomerate spanning insurance, railroads, energy, and consumer goods, Buffett gained both a devoted investor base and a reputation as history’s greatest stock picker. Many analysts have argued that investors paid a premium for Berkshire shares—a “Buffett premium”—due to Buffett’s deft management, dealmaking prowess, and his ability to deliver outsize returns over decades, often outperforming the S&P 500.

Before the retirement announcement, Berkshire was up 19% year-to-date, in stark contrast to the S&P 500’s 3% loss over the same period. However, following Buffett’s announcement, the situation reversed: Berkshire slipped 11%, while the S&P soared 10%.

Expert Opinions: Is the ‘Buffett Premium’ Real—And Is It Fading?

To understand the impact of Buffett’s exit, Business Insider spoke with six leading Buffett watchers, who offered nuanced—and, at times, conflicting—views.

John Longo, finance professor and author of “Buffett’s Tips: A Guide to Financial Literacy and Life,” believes there is a real Buffett premium, though it’s notoriously hard to quantify. “Fewer people might be willing to sell their businesses to a Buffett-less Berkshire,” he said, referencing Buffett’s reputation for offering clean, no-nonsense transactions and permanent homes for acquired businesses.

Bill Smead, founder and CIO of Smead Capital Management, posits that Berkshire has long commanded an above-market multiple due to Buffett. He warns that with Buffett’s departure, “there’ll be another part of the Buffett premium that goes away.” He also noted that during Buffett’s tenureship, despite three instances where the stock dropped 50%, investor confidence buoyed the company. Smead expects that successors will not enjoy the same unwavering shareholder faith—potentially increasing the risk of revolt or instability during downturns.

In contrast, Chris Bloomstran, president of Semper Augustus Investments, argues the premium has already dissipated, disappearing as far back as 1998 when Berkshire paid a rich price to acquire General Reinsurance. “Strong underwriting earnings propelled Berkshire to recent highs, but the decline since the May annual meeting is in line with the broader insurance sector,” Bloomstran said, citing a challenging environment for property and casualty insurers.

Valuation and Market Dynamics

Steven Check, CEO of Check Capital Management, suggests Berkshire’s recent slide is more a function of valuation normalization than declining confidence in leadership. “The stock was arguably, slightly overpriced and has now returned to a fairer valuation,” he observed. Over the last 5–10 years, Berkshire has traded below intrinsic value even with Buffett in charge, pointing to market cycles rather than a singular dependency on Buffett.

Other industry voices, including Brett Gardner, author of “Buffett’s Early Investments,” caution that the market may be overreacting to the headlines. “Two months of trading aren’t enough to draw conclusions,” Gardner says, adding that Buffett’s advancing age—he turns 95 this year—means his departure should have been long anticipated and priced in.

The consensus among these thought leaders? There may never have been a clearly quantifiable “Buffett premium,” but the aura and steady guidance Buffett provided were nonetheless valuable. Larry Cunningham, a noted Buffett scholar, underlines that “responsible valuation analysis” has rarely ever assigned an explicit premium for Buffett’s presence, suggesting the current pullback likely reflects other macro and industry trends.

Is Berkshire Bigger than Buffett?

While many consider Buffett irreplaceable, one of his greatest successes may be the legacy of institutional resilience he leaves behind. After decades of grooming talent, Berkshire’s decentralized operating model and suite of diverse operating businesses create a robust foundation for future stability.

Incoming CEO Greg Abel has served as Berkshire’s vice chair overseeing non-insurance operations and is credited with a pragmatic, hands-off approach echoing Buffett’s style. Abel’s appointment had been telegraphed for years, and internal succession planning is widely viewed as a buffer against sudden leadership risk.

Buffett himself consistently downplayed the premium on his own leadership, focusing public attention on Berkshire’s unique culture and the strength of its managers. In his final letters to shareholders, Buffett emphasized that big, opportunistic acquisitions—always a Buffett specialty—had been “scarce in recent years,” and that the company’s differentiation may now lie less in its chief executive and more in its underlying operational discipline and capital allocation philosophy.

Looking Forward: Can Berkshire Thrive Without Buffett?

Berkshire Hathaway’s future may rest on whether it can sustain its performance without Buffett’s iconic presence. Some analysts argue the company has matured from its days as a boutique, opportunistic dealmaker to a steady, diversified conglomerate more aligned with the global economy.

Berkshire’s underlying business results remain robust. In its latest quarterly results (Q2 2025), the conglomerate reported net earnings of $21.8 billion, with insurance contributing significant underwriting profit. The company’s cash reserves—over $182 billion—also offer potent dry powder for future deals, bolstering confidence that Berkshire has the resources to weather leadership transitions and market cycles.

As Greg Abel prepares to take the reins in January 2026, much will hinge on his ability to maintain Berkshire’s culture, risk controls, and disciplined capital allocation while navigating an investment landscape of higher interest rates, growing geopolitical tensions, and evolving regulatory risks. Investors will be watching closely to see if Abel ushers in an era of stability or if the market will continue to discount Berkshire shares in the post-Buffett era.

Conclusion

The decline in Berkshire Hathaway’s stock following Warren Buffett’s retirement announcement has sparked debate about the true value of executive leadership and investor psychology. While some argue the “Buffett premium” is diminishing, others see current market moves as temporary or driven by sector-wide forces. As one era ends and another begins, the world will be closely watching Berkshire’s next act.