(BFM Stock Exchange) – The Berkshire Hathaway action dropped 5.1% on Monday, reacting to the announcement of the departure of the famous investor at the end of the year. This draft took the investors and raises questions about his successor, Greg Abel. Will the latter show up to the inheritance left by Warren Buffett?

The market did not expect so much “the Oracle of Omaha” seemed eternal to him: Warren Buffett will leave at the end of the year the general management of Berkshire Hathaway, the investment company which allowed it to build its fortune, the sixth largest in the world (160 billion dollars according to Bloomberg).

This announcement, which occurred at the very end of the annual general assembly of Berkshire Hathaway on Saturday, had been very secretly kept. According to American media, only a few members of the famous investor family knew.

To the point that even Greg Abel, a successor designated and officially appointed during the weekend, ignored that Warren Buffett, 94, would announce the moment of his reverence.

Morningstar evokes a “big shock”. Investors did not very well cashed the announcement. On Monday, the Berkshire Hathaway action lost 5.1%, the highest drop in the title on a session since 2020.

“The drop in action is understandable because Buffett is closely linked and associated with the success of the company,” comments Holger Zschaepitz on X, an editorialist specialist in the financial markets for the Die Welt newspaper.

>> Access our exclusive graphic analyzes, and enter into the confidence of the trading portfolio

A “magic” difficult to reproduce

If Warren Buffett is the first to recognize that he made mistakes during his career (buying Berkshire was one, according to him), his success remains undeniable. Under his leadership, Berkshire Hathaway, originally a textile company created in the 19th century, went close to bankruptcy, became the eighth largest company in the world, with a market capitalization of more than $ 1.100 billion. Between 1965 and 2024, the Berkshire Hathaway action recorded an average performance of 19.9% ​​against 10.4% for the S&P 500 dividend included.

Especially Warren Buffett had a particular aura and was known for his shattering statements. And his plea for long -term investment. As an example, let us quote “if you do not think of having an action for ten years, do not even think of holding it for 10 minutes”.

The discreet Greg Abel, a 62-year-old Canadian, who so far directs the energy branch of Berkshire Hathaway, will be able to show up to the heritage of the charismatic investor?

“Greg is ready. I have not doubt it. We have known it for a long time,” Ron Olson, a long -standing member of the Berkshire board of directors on Saturday, in CNBC.

“People love Warren because he has a certain magic,” said Bloomberg Alice Schroeder, author of “The Snowball: Warren Buffett and the Business of Life”. “It is almost impossible to recreate it,” she adds.

A mountain of cash to manage

Antoine Pélet, analyst and portfolio manager at Monocle Asset Management, invested in Berkshire Hathaway, explained very well in 2024 on News Bulletin 247 the challenges that arose for the post-buffett.

Greg Abel “is a person who is quite discreet, whom we know very little, it is a point which is rather negative”. The manager recalls that Warren Buffett had written, in his letter to the shareholders, that the success of Berkshire Hathaway was linked to “twelve investment decisions, twelve in sixty years”.

“The question that arises is to what extent this is replicable by a new management team, management,” he added.

This is all the more so since “Berkshire is growing each year, you have $ 10 billion in cash that arrive every quarter and that must be reallocated”. “This means that Greg Abel in the ten years after Buffett will have to allocate much more capital than Warren Buffett throughout his life,” he warned.

This is also one of the major questions on the market: what will Greg Abel will make the immense mountain of cash that will leave “the Oracle of Omaha”? At the end of March, the company’s treasury reached $ 347.7 billion. A question all the more burning since, underlines Bloomberg, Abel does not have an established assessment in terms of “stock picking”, that is to say the ability to feel the right blows on the equity markets, unlike Buffett.

During the general assembly on Saturday, Greg Abel was asked about his capital allowance strategy. The manager simply replied that the battery of cash bequeathed by Buffett was “an enormous active” and that he would be continuing his future predecessor, reports Bloomberg.

“He had trouble answering this question,” said Cole Smead, a shareholder of Berkshire Hathaway. “I thought that, like Charlie (Munger, the famous Buffett acolyte, who died in 2023, editor’s note) and Warren, he would remember a previous period of his life and would tell an anecdote on a lived experience in the field of investment,” he added. “He didn’t do it”.

Other questions could arise with the end of the Buffett era. Berkshire Hathaway remains, ultimately, a conglomerate with significant investments in listed companies such as Apple, Coca-Cola but also activities managed in its own, in insurance, energy and rail.

Does a separation of these different professions have meaning at a time when conglomerates are becoming increasingly rare? General Electric, perhaps the most famous American conglomerate recently divided into three, the activities of aeronautics, health and energy being now housed in a separate society.

The return to the shareholder could also arise. Berkshire only once paid a dividend, in 1967, and adopted a frugal approach with regard to share buybacks in the past. As an example, Apple, of Steve Jobs’s time, did not pay dividend. This had then changed shortly after the death of its famous founder.

“Some institutional investors may have a list of things to do in mind, including the payment of a cash dividend and a more regular capital allowance program,” said Bloomberg Cathy Seifert, analyst at CFRA Research.

More broadly, one of the things that “investors will have to solve is the notion of ‘buffett prime: does Berkshire Hathaway action still deserve the Buffett bonus when Buffett will no longer be there?”, She questions elsewhere.