Warren Buffett is in his final 2 months as CEO. He's leaving at a tricky time for Berkshire Hathaway.

Core Insights - Warren Buffett's announcement of stepping down as CEO of Berkshire Hathaway has led to a significant decline in the company's Class B shares, dropping 12% to below $480 since the news, while the S&P 500 has risen 20% during the same period [2][3] - Buffett's departure marks the end of an era, as he has been synonymous with Berkshire Hathaway for nearly six decades, transforming it from a failing textile mill into a $1 trillion market value company with approximately $400 billion in annual revenue [5][21] - Greg Abel, currently head of non-insurance operations, will succeed Buffett as CEO in January, while Buffett will remain as chairman [6][21] Financial Performance - Berkshire's third-quarter earnings showed a 34% year-on-year increase in operating income to $13.5 billion, driven by a nearly tripling of insurance underwriting income to $2.4 billion and foreign-currency gains [7] - The company has been a net seller of stocks for 12 consecutive quarters, with a record cash pile of $358 billion after subtracting Treasury payables, indicating a cautious investment strategy amid high stock valuations [12][21] Investment Strategy - Buffett's strategy has led to a significant cash buildup, as compelling investment opportunities are scarce when stocks are at record highs [13][21] - Berkshire sold two-thirds of its stake in Apple since 2023, missing out on potential gains as Apple shares surged by a third in the past three months [14][15] - The company recently agreed to acquire Occidental Petroleum's chemicals business for $9.7 billion, a relatively small deal compared to its cash reserves [18][19] Future Outlook - Despite current challenges, including a lagging stock price and a large cash reserve, analysts believe that leaving Abel with substantial cash could position Berkshire well for future investment opportunities during a potential recession [22] - Berkshire's operating businesses are reportedly close to performing optimally, and its balance sheet remains strong, suggesting a bright outlook under Abel's leadership [22]