We asked Warren Buffett gurus whether his exit is what's bringing Berkshire Hathaway's stock down

Theron Mohamed

Sun, Jul 13, 2025, 1:00 PM 5 min read

• Berkshire Hathaway stock has fallen 11% since Warren Buffett said he'd resign as CEO this year.

• Berkshire gurus were divided on whether this reflects a loss of the "Buffett premium."

• Buffett has loyal investors, but he may be less integral to the company now.

Berkshire Hathaway's investors may be looking at the stock and wondering if the "Buffett premium" is real — and disappearing before their eyes.

The "premium" refers to the long-standing view that Berkshire stock trades at a premium because of Warren Buffett's legendary stock-picking skills, dealmaking prowess, and shrewd management, which saw him transform a failing textile mill into a world-beating conglomerate over six decades.

Going into the annual shareholder meeting in Omaha in early May, Berkshire was up 19% year-to-date, while the benchmark S&P 500 index was down 3%.

At the end of his Q&A, Buffett rocked the financial world by announcing he would step down as CEO in December. Berkshire stock has since fallen 11% while the S&P has climbed 10%.

Berkshire Hathaway didn't respond to a request for comment from BI.

The sell-off might seem like a reaction to the legendary investor's impending departure. But, when they spoke to Business Insider, six of the company's keenest observers were divided over whether this was the famous "Buffett premium" disappearing.

"I believe there is a 'Buffett premium' although I think it is difficult to quantify," John Longo — a finance professor, investment chief, and author of "Buffett's Tips: A Guide to Financial Literacy and Life" — said.

Long said that fewer people might be willing to sell their businesses to a Buffett-less Berkshire, nodding to the investor's reputation for offering clean and simple transactions, hands-off ownership, and a permanent home for companies.

Bill Smead, the founder and chief investor of Smead Capital Management, told BI that Berkshire, which has a $1 trillion market capitalization, commands an above-market valuation multiple for a conglomerate because Buffett is at the helm. Once the investor fully retires, "there'll be another part of the Buffett premium that goes away," he said.

In his 2014 shareholder letter, Buffett said that, during his time as CEO, Berkshire stock fell about 50% from its high three times. Smead said the fact that Buffett remained CEO showed investors have an "unusual level of faith" in him. Smead added that there may be a higher risk of shareholder revolt if the same happens to Buffett's successor, Greg Abel.