Market Insights: Buffett – The Legacy and Lessons From the G.O.A.T.
| The Legacy and Lessons From The G.O.A.T. The time has come. The G.O.A.T. is retiring. Warren Buffett’s decision to step down as CEO of Berkshire Hathaway marks the end of an era – 60 years to be precise. So we are interrupting our new series on innovation and disruption to take a look at Buffett’s legacy and impact on investors, and the lessons we investors can learn from his success. We are also briefly recapping the Berkshire AGM and having a look at the resume of incoming CEO Greg Abel, someone who has some very, very big shoes to fill. |
| This week’s Market Insights is an 8 minute read! (or read the full article) Would you prefer to listen to these insights? You can find the audio version on our Spotify, Apple Podcasts or our YouTube! Quote of the week“Life is like a snowball, all you need is wet snow and a really long hill.” From “The Snowball – Warren Buffett and the Business of Life”by Alice Schroeder. What Happened In The Markets This Week? Now let’s dive into the main piece! Warren Buffett’s Legacy The investment community already knew the “Oracle of Omaha” would be stepping down in the next few years. But still, last week, it was a significant moment. His investment journey started 74 years ago, and he’s led Berkshire for 60 of them. Buffett, alongside the late Charlie Munger, didn’t just build an unmatched investment track record. They influenced millions of investors, championed a common-sense approach to investing, and acted as a vital counterpoint to Wall Street’s excesses. Their timeless investing philosophy has inspired and shaped a lot of our platform! Here are some of the big items from the AGM in Omaha last weekend. 3 Key Takeaways from the 2025 Berkshire Hathaway AGM This year’s AGM in Omaha was one for the history books. Here’s the rundown: Greg Abel is Officially CEO: Succession Sealed – No major surprise here: Greg Abel is the new CEO. This was telegraphed back in 2021 and strongly endorsed by Charlie Munger, too. – Abel (62) is currently Vice Chair of Non-Insurance Operations and a seasoned operator within Berkshire. – Buffett isn’t disappearing. He remains Chairman of the Board. Expect him to offer guidance and mentorship, especially on big capital decisions and preserving Berkshire’s unique culture. In his own words: “I’ll still be around, probably with my feet up, reading more annual reports than ever. But Greg’s the boss.” Berkshire’s Report Card: Solid, With Mixed Spots Operating Companies: – Strong performance from BNSF (railroad) and Berkshire Hathaway Energy (BHE). – GEICO: Showing underwriting improvements despite a tough insurance market. – Manufacturing, Service & Retail: A mixed bag (pardon the pun), reflecting the broader economy.Investment Portfolio: Apple, American Express, Coca-Cola, and Bank of America remain core holdings. |
| The company’s listed investments are worth some $280 billion, and the cash pile has grown to a whopping $350 billion. As for what they’ll do going forward, the approach remains largely the same: – The approach to public equities will remain opportunistic, with a focus on long-term value. They’re yet to see any good deals within their size range. – Share buybacks will still be the go-to when Berkshire stock is below their estimated intrinsic value. – Bolt-on acquisitions and smaller deals for existing businesses remain a priority. Greg Abel acknowledged technology’s growing importance across Berkshire’s businesses. So don’t be surprised if we see more tech names among their holdings under his leadership. Buffett shared his candid views on the economy. 1. Inflation: Still a concern. “Inflation is a tapeworm,” he warned, noting persistent cost pressures. 2. Tariffs & Geopolitics: He hopes for rational trade, but acknowledged ongoing global uncertainties. Berkshire’s portfolio diversity helps with this. 3. US Economy: Long-term, he’s optimistic, but he sees slower growth ahead. “The American tailwind is powerful, but even strong winds can face headwinds. The New Captain: Things to Know About Incoming CEO Greg Abel With Buffett as Chairman, Greg Abel steps into the CEO shoes, and they are BIG shoes to fill. Here’s the lowdown on the new leader: – From Energy to Empire: Abel’s Berkshire Journey –Greg Abel is 62 and Canadian-born. He joined Berkshire in 1992 via MidAmerican Energy. He was appointed Vice Chair of Non-Insurance Operations for all of Berkshire in 2018 and joined the board.He oversaw massive growth, turning BH Energy into a utility giant in electricity, gas, and renewables (US, UK, Canada). –He led major investments in renewables, especially wind, making BHE an industry leader. Abel knows the company inside out and is regarded as a skilled manager and capital allocator. His background isn’t in stock picking or insurance, but he’ll have help with those functions: – Ajit Jain, Vice Chair of Insurance, remains head of Berkshire’s massive insurance arm. – Todd Combs & Ted Weschler continue managing large parts of the investment portfolio. —If you want to stay updated on leadership news within Berkshire, simply add BRK.B to your Simply Wall St Watchlist to get notified. Abel isn’t expected to make changes to Berkshire’s strategy or culture anytime soon, and that’s probably exactly what shareholders want to hear. So, given his past 30+ years working within Berkshire and his time spent under Buffett’s wing, it’s probably fair to say he’s well prepared for the job ahead of him. With Buffett handing over the reins to Abel, we want to reflect on 4 key lessons we’ve learnt from Buffett over the years. 4 Lessons From Buffett’s Career Buffett is famed for value investing and folksy wisdom. But some easily overlooked aspects fueled Berkshire’s rise: 1. Look for Enduring and Sustainable Competitive Advantages (Moats) Buffett is known for buying high-quality stocks when they trade at prices that provide a margin of safety. But his biggest wins haven’t come from stock prices rising from discounted prices to “fair value.” The big winners have resulted from earnings compounding over decades. Coca-Cola is a great example. Between 1988 and 1994, Berkshire spent $1.3 billion buying 400 million shares. That stake is now worth about $29 billion. The share price has gained a fairly modest 10% a year since 1994. But 10% compounded for 31 years has resulted in a 2,100% gain on the share price alone. In 2024, Berkshire received dividends worth $776 million from its Coca-Cola stake. That’s a roughly 60% annual yield on cost (a valuable metric which we also display in our portfolio tool). Since 1994, it’s received $12 billion in total dividends, or 9x its initial investment. That’s a prime example of the saying “patience pays”. Coca-Cola wasn’t a shiny new company when Berkshire invested, nor was it growing at breakneck pace. In fact, it was 100 years old. The key was the sustainable competitive advantage (moat) and a long, long runway of growth ahead. Coca-Cola’s brand recognition and distribution network made life difficult for competitors. He thought in decades, not months. If a company has a sustainable moat, it only needs to grow modestly to compound earnings over time. You can use the Simply Wall St Company Screener to find firms with potential moats. Open the Potential compounders screener below, and save it as your own. If you want to filter down even further, add more filters like strong net margins and manageable debt.Potential Compounders Screener – Simply Wall St For our breakdown on the other 3 lessons: Cut Out the Noise The Importance of Capital Allocation Be a Lifelong Learner and Know Your Limits Check out the full piece! It also explains howSimply Wall St helps you implement these timeless principles. Full Article |
| The Insight: Individual Investors Can Apply The Buffett Playbook With A Few Tweaks The principles that built one of the world’s most successful investment records can be directly applied to how you choose your own stocks and manage your portfolio. The core ideas – value, quality, long-term thinking – are as potent as ever. – Define Your Own Fair Value for Any Stock: –Understanding what a business is truly worth is crucial. –For any company you’re considering, use your research and understanding of Buffett’s valuation principles (like looking for a margin of safety) to establish what you believe is its fair value. –This acts as an anchor, helping you make rational buy, hold, or sell decisions based on value, not just price swings (a core Buffett discipline). –Simply Wall St’s Community Narratives are a great place to start if you’re wanting to understand how to value a company, or to see how fellow investors perceive value. -Discover Your Own “Buffett-Like” Opportunities: –Look for strong and consistent Return on Equity (ROE) –Low debt-to-equity ratios –A history of positive free cash flow –Reasonable P/E or P/B ratios relative to their industry and historical averages. -Analyze Stocks Through a Buffett Filter: –Is the company in your “circle of competence“? –Does it have an identifiable and durable competitive advantage? –Is it run by management teams you trust? –Is it financially sound with manageable levels of debt? Pro Tip: Consider looking for smaller, perhaps overlooked, owner-operated businesses in less glamorous industries. While small companies won’t move the needle for Berkshire, for individual investors like us, they can be big winners. |