By Claudia Assis and Tomi Kilgore
Leadership turnover and losing the Buffett premium could weigh on the stock, even if the Berkshire's investment philosophy doesn't change much
There are a number of issues that may weight on Berkshire Hathaway's stock after Buffett retires, but concerns over losing a key stock picker, Todd Combs, doesn't seem to be one of them.
Berkshire Hathaway faces plenty of challenges as Warren Buffett steps down later this year, but higher executive turnover and a narrowing of the premium the stock has enjoyed under the &#34;Oracle of Omaha&#34; are likely among the more pressing ones.
Wall Street got a taste of that turnover on Monday, with Berkshire's (BRK.B) (BRK.A) announcement that Todd Combs, the Geico chief executive and one of Buffett's key stock pickers, was leaving for JPMorgan Chase (JPM). Longtime CFO Marc Hamburg is also departing and will step down on June 1, 2026.
Handpicked CEO successor Greg Abel will, of course, face a lot of scrutiny and comparisons with Buffett, who, besides his reputation as a keen investing mind, also enjoyed the status of a cultural cornerstone - somewhat of a Mister Rogers of finance, if Mister Rogers had a bank account big enough to buy his entire neighborhood and then some.
For some employees, working under Abel won't have the same cachet as  working for Buffett, which could precipitate more turnover.
Monday's management changes were part of the widely anticipated and publicized handoff from Buffett to Abel, who will take the reins at Berkshire in January.
Some change is inevitable with the CEO turnover, but the timing of Monday's announcement was a little surprising, said Meyer Shields, an analyst with KBW. Coming while Buffett is still CEO, perhaps it was meant to signal to the market that they met with Buffett's approval, he said.
Others viewed Combs' departure, at least, as less of a surprise.
Christopher Bloomstran, president and chief investment officer at Semper Augustus Investments Group, said that Combs' previous roles, which included sitting on JPMorgan's board of directors for nine years (a seat he will relinquish) and leading Geico, &#34;indicated a diminished role in managing the smaller portion of Berkshire's equity portfolio,&#34; which he did along with Ted Weschler, another of Berkshire's stock pickers.
Buffett has made clear that Abel would be responsible for overall capital allocation, including meaningful investments in publicly traded equities, Bloomstran said.
&#34;Todd may have aspired to managing more or all of the portfolio, which wasn't going to happen,&#34; Bloomstran said.
And given his lack of reinsurance experience, Bloomstran didn't believe Combs was a realistic candidate to succeed Ajit Jain, who is the current vice chairman of the insurance operations.
He said there's a chance that Weschler will now oversee a larger portion of Berkshire's equity portfolio, in collaboration with Abel on &#34;materially large investments.&#34;
Those sentiments were echoed by Adam Patti, CEO of VistaShares, which manages the VistaShares Target 15 Berkshire Select Income ETF OMAH. The ETF holds Berkshire's stock and shares of Berkshire's top 20 holdings.
&#34;I think it's a non-issue,&#34; Patti told MarketWatch, when asked about Combs' departure.
From an investor's perspective, there should always be some pause after a CEO change, but in Berkshire's case Patti said that already happened in May when Buffett announced his retirement. The stock had closed at a record on May 2 before the retirement announcement, then fell 5.1% the day investors reacted to the news.
The company's remaining stock pickers, and those who run the daily operations, like Abel and Weschler, are steeped in Buffett's philosophy so the long-term trajectory of the company shouldn't change, he said.
&#34;The outlook for the company as a whole remains the same as it was&#34; the day before the announcement of the leadership changes, Patti said.
That said, there are those on Wall Street who believe that while the remaining leaders are likely to be very capable in keeping the ship on Buffett's course, the likelihood of further leadership turnover is among the challenges for Berkshire in the short term.
Combs was certainly a strong asset for Berkshire, so there is some downside to losing him, as evidenced by the &#34;unique&#34; opportunity he was given at JPMorgan, said Wall Street veteran investor Doug Kass, president of hedge fund Seabreeze Partners Management. (A decade ago, Kass was the Berkshire skeptic and bear who Buffett selected for a panel of analysts asking questions that the company used to have at its annual meetings.)
Another problem for Berkshire investors might be valuation, Kass said.
&#34;I have long felt that since Warren announced his replacement,&#34; plus Monday's announcements, that the premium valuation of Berkshire's stock relative to other diversified businesses and conglomerates would narrow, Kass said.
&#34;That is exactly what has happened during the months since his original intention to step down. And I think the Buffett premium continues to dissipate over time,&#34; Kass said.
Since Buffett's retirement was announced on May 3, Berkshire's stock has shed 7.9% through Monday, while the S&amp;P 500 index SPX has run up 20.4%. More recently, the fortunes have changed a bit, with Berkshire's stock up 4.1% since the end of October while the S&amp;P 500 has inched up just 0.1%.
Kass also noted that Buffett has steadily been accumulating cash at Berkshire for a while, perhaps reflecting not only Buffett's view on overall equity valuations, &#34;but also his intention to leave Greg with a fortress-like balance sheet&#34; and a blank canvas to create with, through diversifications and acquisitions.
The company is also facing likely deteriorating profits at Geico, Berkshire Hathaway Reinsurance and Burlington Northern Santa Fe, and tax-credit uncertainty at Berkshire Hathaway Energy, KBW's Shields said.
&#34;If I had a chance to meet [Abel] I would implore him to improve Berkshire's disclosures,&#34; the analyst said. That same level of weaker disclosures may prove to be inadequate to investors who were justifiably comfortable relying on Buffett's presence.
Abel also might not want to become the public face of the company and draw &#34;perennial comparisons&#34; with Buffett, Shields said.
-Claudia Assis -Tomi Kilgore
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(END) Dow Jones Newswires
12-09-25 0726ET

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<p>Berkshire Hathaway faces challenges as Warren Buffett retires, including executive turnover and a narrowing stock premium. Todd Combs, a key stock picker, is leaving for JPMorgan Chase, but his departure is seen as a non-issue. CEO successor Greg Abel will face scrutiny, and while the company's investment philosophy remains unchanged, further leadership turnover is a concern. The stock's valuation may narrow as a result of these changes.</p>

- Berkshire Hathaway faces challenges as Warren Buffett prepares to retire, including higher executive turnover and a potential decline in its stock premium.  
- The recent departures of key executives, including Todd Combs, may impact investor confidence, although remaining leaders are expected to uphold Buffett's investment philosophy.  
- Since the announcement of Buffett's retirement, Berkshire's stock has decreased by 7.9%, highlighting concerns over future leadership and company performance.

Berkshire has problems brewing after Buffett leaves, but losing stock picker Todd Combs isn't one of them