Warren Buffett says he plans to step down as head of Berkshire
Warren E. Buffett has been at the forefront of American capitalism for decades as the CEO of Berkshire Hathaway, the conglomerate he built into a $1.1 trillion colossus.
By the end of the year, he is preparing to give up that role.
Buffett said at Berkshire's annual shareholder meeting Saturday that he plans to ask the company's board to approve making Gregory Abel, his heir apparent, the CEO by the end of the year.
Abel would have 'the final word' when it comes to the company's operations, how it invests and more, Buffett, 94, told the tens of thousands of Berkshire shareholders at the meeting in Omaha, Nebraska.
But Buffett added that he 'would still hang around and conceivably be useful in a few cases.' He will remain chair of Berkshire — turning that role over to his son Howard Buffett upon his death — and remains the company's single biggest shareholder, with a roughly 14% stake that is worth about $164 billion.
Buffett's plan, which he said had been known only to two of his children who sit on the company's board, Howard and Susan Buffett, was greeted by a minute-long standing ovation by Berkshire shareholders. Abel, 62, appeared surprised by his boss's announcement. After the announcement, several board members attending Berkshire's meeting hugged one another.
Although Buffett looked in good health, having led several hours of questions from investors Saturday, changes to this year's annual meeting — his 60th at Berkshire — reflected his advancing age. He used a cane, which he first mentioned in the company's annual letter in February, and shortened the shareholder question session by several hours.
If the board approves the plan, it would signify the end of an era for one of the most successful companies in modern capitalist history and one of its most famous investors. Buffett has amassed a Midas-like fortune by being a savvy stock picker, buying up companies and holding them for the long term.
Through that investing philosophy, he assembled a conglomerate that runs a huge insurance operation, a major railroad, and dozens of consumer companies and oversees a vast stock portfolio.
Among Berkshire's most notable holdings are names that many consumers recognize: auto insurer Geico, the BNSF railroad, power utility Berkshire Hathaway Energy, Dairy Queen, See's Candies, Fruit of the Loom, paint company Benjamin Moore, and private jet company NetJets. Together, those businesses helped Berkshire grow a cash hoard that now sits at nearly $348 billion, more than the stock market valuation of McDonald's.
Berkshire's financial firepower has made Buffett one of the most influential businesspeople in the world, giving his pronouncements on many topics, including politics, great weight. That included his criticism of President Donald Trump's trade policies, which Buffett took aim at Saturday.
'Trade should not be a weapon,' Buffett said at the annual meeting. 'I don't think it's right, and I don't think it's wise.'
Buffett's comments on tariffs were far from his first foray into politics. A Democratic supporter, his name was attached to a proposal years ago by President Barack Obama that would have raised taxes on millionaires. But Buffett has kept a low profile for months, and even on Saturday, he did not mention Trump by name.
Buffett's plan to step down would complete one of the most-watched leadership transitions in corporate America. For years, he faced questions about who could take over Berkshire, a uniquely complicated business, and many executives had been floated as his successor.
But in 2021, Buffett finally confirmed that it would be Abel, who joined the Berkshire fold when the company bought his energy business in 2000. Since then, the Canadian executive has risen through the ranks, turning what is now called Berkshire Hathaway Energy into one of America's biggest power producers.
Abel is currently the vice chair of Berkshire's businesses other than insurance. Oversight of the conglomerate's behemoth insurance operations has remained with Ajit Jain, a longtime Buffett lieutenant. Buffett and other executives have professed their belief that Abel could maintain Berkshire's culture.
'Greg is ready,' Ronald L. Olson, a longtime Berkshire director who is also stepping down, told CNBC after Buffett's announcement Saturday.
Olson added that he hoped Buffett could serve as a valuable sounding board for Abel, much as Charles T. Munger, Buffett's longtime business partner who died in 2023, did.
Together, Buffett and Munger entertained investors and more — notably at the Berkshire annual meetings — with a sort of vaudeville act, Buffett as the wry optimist and Munger as the sharp-tongued pessimist.
Berkshire's latest financial report card underscored the complications that Abel will confront as CEO.
The company reported a sharp drop in first-quarter earnings, with operating income — Buffett's preferred measure — down 14% from the same time a year ago to $9.6 billion. Using generally accepted accounting principles, Berkshire reported a nearly 64% drop in net income, largely because of paper investment losses.
But while markets have grown more volatile in response to Trump's whipsawing approach to trade, Buffett professed little worry about the effects of that volatility on Berkshire.
'It's nothing,' he told shareholders, suggesting that riding out market vicissitudes was part of stock investing.
The company reported that a 'majority' of its businesses had lower sales and earnings in the first three months of the year, particularly in insurance underwriting income, which was hit by losses tied to the California wildfires.
In a regulatory filing Saturday, Berkshire warned that Trump's trade policies were generating 'considerable uncertainty,' which could affect the company's operating results. 'We are currently unable to reliably predict the potential impact on our businesses, whether through changes in product costs, supply chain costs and efficiency, and customer demand for our products and services.'
Berkshire's cash pile grew to $347.7 billion, a record, reflecting that Buffett has not found the kind of blockbuster investment opportunities that helped put the company on the map. In the past, he has acknowledged that given Berkshire's size, it is nearly impossible now for Berkshire to find deals that could meaningfully augment its earnings.
During his question-and-answer session with shareholders at the annual meeting Saturday, Buffett acknowledged stocking up on cash to prepare for any potential buying opportunity. He revealed that he had weighed a potential $10 billion investment but later refused to elaborate.
Berkshire continued to be a net seller of stocks, selling $4.68 billion worth of equity in the quarter, compared with $3.18 billion in purchases.
One matter that Buffett did not directly address Saturday is what would happen to Todd Combs and Ted Weschler, whom he hired more than a decade ago to help pick stocks for Berkshire. The two have been widely expected to become Berkshire's stock pickers after Buffett steps away, though Combs has also become the CEO of Geico.
A number of prominent corporate and business leaders were on hand Saturday, including Microsoft co-founder Bill Gates, Tim Cook of Apple (which is one of Berkshire's biggest stock holdings) and billionaire financier William A. Ackman. Two first-timers, Hillary Clinton and Priscilla Chan, the wife of Meta's CEO Mark Zuckerberg, were also present.
This article originally appeared in
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Observer
2 days ago
- Observer
America's summer hot spots wonder: Will the vacationers still come?
Tim Cafferty, who owns a vacation rental business on North Carolina's Outer Banks, is upbeat about the summer season, but he is also doing anything he can to lure would-be vacationers. His company, Outer Banks Blue, ran a special promotion in March offering a 15 per cent discount on bookings. He is encouraging property owners to drop their prices. And for the first time, he is allowing visitors to reserve many of the 300 houses his company manages for just a few days instead of requiring them to stay a full week. All that has helped juice his sales, but there are still surprising vacancies. The week of the Fourth of July, a highly coveted rental period, is 'very soft for some reason,' Cafferty said. And more houses than usual are still available for late August, which could be because people are waiting until the last minute to book their getaways. In the end, Cafferty said, he would count himself lucky if Outer Banks Blue's occupancy levels this summer ended flat compared with last year, given the uncertain economic climate. Dishes are preapred at Lucky 12 Tavern in Nags Head, N C. — The New York Times 'People are ready to come,' he said. 'They are just looking for a good price.' Cafferty's cautious optimism in the face of those worrisome trends is indicative of how many business owners in popular vacation areas are approaching the crucial summer months. Although American consumers are showing some signs of strain amidst concerns about higher prices and the prospect of a recession, many businesses that cater to domestic tourists are preparing, somewhat guardedly, for what they expect to be a relatively normal summertime surge. Their bullishness is not unfounded. For all the concerns in recent years that consumer spending would buckle under soaring inflation and high borrowing costs, it has managed to remain solid, powering economic growth even when the economic outlook was hazy. The summer season will provide the latest stress test for that sunny spending pattern — and the lifeblood of many vacation towns is at stake. Seating at a restaurant at the Nags Head Fishing Pier in Nags Head, N C. — The New York Times 'Right now, it's all scary,' said Gary Jonas, who owns a bar and food truck lot, the Little Fleet, in Traverse City, Michigan, a summer destination in northern Michigan known for its cherries and vineyards. 'We're just crossing our fingers and hoping that it's similar to previous years.' Typically, American consumers put their money to work during the summer months on trips and leisure activities. Airlines, hotels and short-term rental companies count on bumps in bookings. Local economies in destination areas benefit from a swelling summertime population that buoys beachside cafes, souvenir shops, ice cream parlors and resorts. But consumers are bedeviled this year by a confluence of challenging circumstances that could curtail their summer spending. Their feelings about the economy have soured significantly since the beginning of the year amidst President Donald Trump's tariff rollout. Stock market volatility has made some consumers more apprehensive. So far, consumers are still spending. But for the most part, they no longer have the savings they had amassed during the pandemic that allowed them to spend more freely. Credit card debt that is 90 days or more past due has been rising across income levels and household debt has piled up. On calls with investors, consumer-facing companies are reporting that customers are trimming spending on discretionary items like meals out and snack foods; and warning that tariffs will force them to raise prices. Anglers at the fishing pier in Nags Head, N C. — The New York Times And if tariffs rise at the end of Trump's 90-day pause, that will put additional pressure on consumers who may suddenly find themselves facing higher costs for goods and services — just as the summer season is revving into high gear. 'There's a pullback in travel demand,' said Laura Rosner-Warburton, senior economist at MacroPolicy Perspectives, a forecasting firm. Prices for hotels and airfares have fallen, she noted, which suggests consumers are pulling back their spending on leisure. 'That's a sign of some weakening,' she said. There are some bright spots for summer businesses. Travel often holds up reasonably well when the economy softens, though it takes a hit if the circumstances become dire enough. Spending on travel dipped during and after the Great Recession in 2007-09, for instance. And for now, the labour market remains strong, without the kind of steep job losses that typically translate into less spending. Domestic destinations could also see a boost from American travellers, especially those with lower incomes, who may choose to vacation in the United States rather than go abroad. The share of consumers planning to go on a domestic vacation in the next six months bounced back in May, to about 42 per cent, according to The Conference Board. 'I would expect there to be more domestic travel this year than the previous few,' said David Tinsley, an economist at the Bank of America Institute, which found that lower- and middle-income households were more likely to drive to their destinations than fly. 'It's consistent with an idea of people being a little bit more prudent,' he said. It is that consumer frugality that has made Brian Gagnon, president of the Lake Area Chamber of Commerce, confident about the upcoming months. The Lake of the Ozarks, a human-made body of water in central Missouri, is a favoured driving destination for people in the Midwest, which he hopes will make it more attractive for travellers looking to save on airfare this summer. Gagnon, who also owns a swimwear shop in the area called Summer USA, says foot traffic on Bagnell Dam Strip, the main shopping and dining street, has been high. Tickets for an annual car show in May sold out within days. Sales at his store are slightly up at this point compared with last year. Racers at LeMans Go-Karts in Lake Ozark, Mo. — The New York Times 'We'll keep an eye on things and just keep our finger on the pulse with everything,' he said. 'But I think going into it, it looks pretty positive from everything we've seen so far.' The picture could be very different for places that depend heavily on overseas visitors, such as New York. Research firm Tourism Economics expects that international travel to the United States will be down 9.4 per cent in 2025 as foreign travellers stay away for reasons including economic and political uncertainty. Some business owners are also preparing for the possibility that visitors might be less inclined to open their wallets this year. Nick Sharp, director of a restaurant company in Steamboat Springs, Colorado, known as Rex's Family of Restaurants, said he was planning to more aggressively market discounts at happy hours, for example, as well as hire fewer employees across his six restaurants. One of the establishments, a Mexican restaurant called Salt & Lime, is introducing a less expensive lunch menu instead of charging the same prices for lunch and dinner. 'Our thought pattern is revolving around this consumer sentiment situation where people are not yet without money but just not yet sure that they are going to have the money that they would normally spend,' he said. On the Outer Banks, a chain of barrier islands off North Carolina, businesses are likewise adapting to the current economy — and holding their breath. Mark Ballog, who owns Lucky 12 Tavern in Nags Head, North Carolina, said he did not plan to raise menu prices this summer despite the hefty cost of fish and meat because he worried about 'scaring people away.' He is anticipating selling a lot of his signature 16-inch New York-style pizzas this year to families who want cheaper meals. But his outlook is hardly gloomy. 'I'm pretty hopeful,' he said. 'This area here — we attract a lot of people that don't have a money problem in the world.' — The New York Times BLURB Consumers are bedeviled this year by a confluence of challenging circumstances that could curtail their summer spending. Their feelings about the economy have soured significantly since the beginning of the year amidst President Donald Trump's tariff rollout
Observer
5 days ago
- Observer
The top sources of U.S. steel and aluminium imports
The U.S. tariff rate on most imported steel and aluminum doubled on Wednesday as President Donald Trump ratcheted up a global trade war. Here's a summary of the major trade partners it will affect. STEEL: Roughly a quarter of all steel used in the U.S. is imported, the bulk of it from neighbours Mexico and Canada or close allies in Asia and Europe such as Japan, South Korea and Germany. While China is the world's largest steel producer and exporter, it sends very little to the United States. Tariffs of 25% imposed in 2018 shut most Chinese steel out of the market. China exported 508,000 net tons of steel to the U.S. last year or 1.8% of total American steel imports. ALUMINUM: For aluminum, the U.S. is more heavily reliant on imports. Roughly half of all aluminum used in the U.S. is imported, with the vast majority coming from Canada. At 3.2 million tons last year, Canadian imports were twice those of the next nine countries combined. The next largest sources of imports are the United Arab Emirates and China, at 347,034 and 222,872 metric tons, respectively. The U.S. aluminum smelting industry is small by global standards. Total smelter capacity in the country was just 1.73% of the global total according to the U.S. Geological Survey.
Observer
29-05-2025
- Observer
US court blocks most Trump tariffs
NEW YORK:A US trade court blocked most of President Donald Trump's tariffs in a sweeping ruling on Wednesday that found the president overstepped his authority by imposing across-the-board duties on imports from US trading partners. The Court of International Trade said the US Constitution gives Congress exclusive authority to regulate commerce with other countries that is not overridden by the president's emergency powers to safeguard the US economy. "The court does not pass upon the wisdom or likely effectiveness of the President's use of tariffs as leverage," a three-judge panel said. "That use is impermissible not because it is unwise or ineffective, but because [federal law] does not allow it." Financial markets cheered the ruling. The US dollar rallied following the court's order, surging against currencies such as the euro, yen and the Swiss franc. Wall Street futures rose and equities across Asia also jumped. The judges also ordered the Trump administration to issue new orders reflecting the permanent injunction within 10 days. The administration minutes later filed a notice of appeal and questioned the authority of the court. The court invalidated with immediate effect all of Trump's orders on tariffs since January that were rooted in the International Emergency Economic Powers Act (IEEPA), a law meant to address "unusual and extraordinary" threats during a national emergency. The court was not asked to address some industry-specific tariffs Trump has issued on automobiles, steel and aluminum, using a different statute. Trump has made charging US importers tariffs on goods from foreign countries a central policy of his ongoing trade wars. A White House spokesperson said US trade deficits with other countries constituted "a national emergency that has decimated American communities." The ruling came in lawsuits filed by the Liberty Justice Center on behalf of five small US businesses and by 12 US states. Oregon Attorney General Dan Rayfield called Trump's tariffs unlawful, reckless and economically devastating. Trump has claimed broad authority to set tariffs under IEEPA. The law has historically been used to impose sanctions or freeze assets. Trump is the first US president to use it to impose tariffs. — Reuters
