Legendary investor Warren Buffett and his Berkshire Hathaway conglomerate suffered a rare setback Monday following the 94-year-old’s announcement he would step aside as Berkshire’s CEO at the end of this year, which caused Berkshire’s share price to sink and Buffett’s net worth to shrink.
Warren Buffett's six-decade tenure as Berkshire Hathaway CEO will come to an end this year.
Class A shares of Berkshire dropped 6% from $809,000 to $757,000 by mid morning, while Class B “baby Berk” shares also fell 6% from $540 to $506, erasing roughly $45 billion in market capitalization.
The slide came after the company’s annual shareholder meeting in Omaha included first-quarter operating earnings below Wall Street expectations – its $6,694.59 operating earnings per Class A share was 5% below consensus analyst forecasts, according to FactSet – but analysts largely attributed the stock pullback to Buffett’s upcoming retirement.
Buffett’s retirement “will probably impact investors’ view of Berkshire more than it will actual operations,” KBW analyst Meyer Shields wrote in a Sunday note to clients.
Buffett’s fortune shrank by more than $10 billion to $157.7 billion amid the selloff, according to Forbes’ estimates, making him by far Monday’s biggest billionaire net worth loser.
Berkshire will “miss Buffett's superior capital allocation skills, market ‘clout’ and relationships,” UBS analyst Brian Meredith remarked in a Monday note.
Buffett will still serve as chairman of the board upon his retirement at year’s end, the company confirmed Monday. Berkshire also officially announced that Greg Abel, the head of the firm’s non-insurance operations, secured the board’s appointment as Berkshire’s incoming president and CEO, as expected.
This is a breaking news story and will be updated.