Berkshire Hathaway (BRK.B) stock has looked shaky ever since Warren Buffett announced his retirement from the company during last month’s annual shareholder meeting. Incidentally, the stock hit its record high a day before the meeting and is now down just under 10% from those levels, underperforming the S&P 500 Index ($SPX) over the period. The price action is not surprising, as there was always a “Buffett premium” built into the stock. 

That said, Buffett’s retirement itself wasn’t a surprise since Buffett had officially named Greg Abel as his successor in 2021. Moreover, at 94, Buffett’s retirement was inevitable. As Berkshire heads into a new era under Abel’s leadership, markets seem jittery about how the company will change under the new CEO. In this article, we'll discuss how Berkshire could change under Abel and whether it makes sense to buy the dip in Berkshire stock.

What Happens to Berkshire After Abel Takes Over?

We will likely see some continuity at Berkshire as Buffett will continue to be the chairman of the board of directors, after stepping down as the CEO at the start of 2026. Also, Abel has vowed to preserve the culture at Berkshire that Buffett built over many decades. “It’s really the investment philosophy and how Warren and the team have allocated capital for the past 60 years,” said Abel at the annual meeting. He emphasized, “Really, it will not change. And it’s the approach we’ll take as we go forward.”

However, Abel has indicated that he might be a more hands-on CEO than Buffett, who lets the dozens of subsidiaries run almost independently. While Abel said that Berkshire’s various businesses “run very autonomously, and that remains in place,” he added, “if there’s an opportunity I see in one of their industries, we’re going to discuss it.”

There are two sides to the hands-on approach that Abel is expected to pursue. On the positive side, Buffett has received a lot of criticism for being too hands-off and patient, as long-time holdings like Coca-Cola (KO) and Kraft-Heinz (KHC) continued to underperform. A more hands-on and proactive approach under Abel might not be a bad recipe for Berkshire in that context.

However, on the other hand, one of the reasons Berkshire was able to acquire so many companies was that these businesses were convinced of their independence within the broader conglomerate. A hands-on approach at Berkshire could deter some private companies from selling themselves to Berkshire.

Could Berkshire’s Investment Policy Change?

While Abel hasn’t talked much about his investment philosophy, we will get to know more in due course, particularly on investing in tech stocks, which Buffett has generally avoided over the last six decades. Sooner rather than later, Abel will need to address Berkshire’s burgeoning cash pile, which was almost $350 billion at the end of March. However, Berkshire’s investment philosophy is not expected to change significantly under Abel, even though there might be some adjustments.

Should You Buy Berkshire Stock Now?

It is always tough to value a conglomerate like Berkshire given the many moving parts. Moreover, the company’s GAAP earnings don’t tell the correct picture as they include the unrealized gains/losses on its nearly $280 billion portfolio of publicly traded securities and can therefore be quite volatile.

The operating earnings that Berkshire reports are a much better indicator of its profitability. The metric stood at $47.4 billion in 2024 as compared to $37.4 billion in 2023 and $30.9 billion in 2022. The company’s earnings have risen at a steady pace over the last couple of years, predominantly due to higher underwriting and investment income from its insurance operations.

After adjusting for the cash and publicly traded securities, and excluding the earnings of “controlled businesses” like Kraft-Heinz and Occidental Petroleum (OXY) from the operating earnings, Berkshire is valued at less than 10x its trailing operating earnings, which does not look exorbitant. 

However, the price-book value multiple, which is now at 1.62x, tells a different tale. In the past, the conglomerate used to repurchase its shares only when the multiple was below 1.2x. However, in mid-2018, the company made the policy more flexible, giving more discretion to Buffett to buy back the shares.

Berkshire went on a buyback spree between 2020 and 2021, and repurchased over $50 billion worth of its shares between these two years, but hasn’t repurchased any shares for three consecutive quarters, which could be Buffett’s way of saying he does not find the stock particularly attractive here. That said, the legendary investor has seemed bearish in general and has been a net seller of stocks for 10 consecutive quarters.

While I don’t find Berkshire’s valuation mouthwatering here, it should be seen in the context of the broader market valuations that, too, are trending above historical averages. Buffett stepping down as Berkshire’s CEO naturally adds to uncertainty as his are really big boots for anyone to fill, but I believe there will be reasonable continuity at the company with the nonagenarian as the chairman. I used the recent pullback in Berkshire to add to my existing positions and will consider adding more if the stock were to fall further. However, investors should keep their expectations modest and expect the stock to only slightly outperform the markets over the medium to long term, given its scale, which makes extraordinary outperformance quite challenging. 

Berkshire Stock Forecast

Despite being a $1 trillion behemoth, Berkshire is covered by only six analysts as tracked by Barchart, of which two rate it as a “Strong Buy” and four as a “Hold.” The stock’s mean target price is $537.75, which is 9.5% higher than the June 10 closing price.