Berkshire Hathaway is reshaping its top ranks in one of the clearest signs yet that the conglomerate is moving away from Warren Buffett’s famously hands-off operating style as Greg Abel prepares to take full control. The overhaul — including the addition of a general counsel, a new president overseeing consumer, service and retail units, and the exit of investment manager and Geico CEO Todd Combs — marks a turn toward a more centralized structure after decades in which Buffett allowed subsidiaries to run largely on their own. Some expect more turnover to come at the conglomerate as the 95-year-old legendary investor prepares to step down as CEO at the end of 2025, creating more volatility for the stock. “It was decentralized to the extreme. No other company its size is like it,” said Bill Stone, CIO at Glenview Trust Company and a Berkshire shareholder. The new roles, he added, enable Abel to manage the firm more effectively as authority shifts away from Buffett. For decades, Berkshire’s loose structure worked because it revolved around Buffett’s judgment and long-standing relationships with subsidiary CEOs. The move to install a general counsel and a business-line president reflects a shift toward governance practices more typical at companies of Berkshire’s scale. Why Combs Is Leaving Combs’ departure is the most eye-catching announcement to many. Combs, 54, will be joining JPMorgan Chase as head of the bank’s new Security and Resiliency Initiative, to find direct equity investments in the defense, aerospace, health care and energy industries. Combs had been juggling two major roles: managing part of Berkshire’s equity portfolio (worth about $15 billion) and running its giant auto insurer Geico. “I was not too surprised … I do not know what his role would have been under Greg Abel, both in terms of managerial responsibilities with respect to insurance and portfolio management,” said David Kass, finance professor at the University of Maryland and a Berkshire shareholder. “At the relatively young age of 54, Todd has accepted a position with greater responsibility and visibility with substantial upside career potential within JP Morgan and elsewhere.” Meyer Shields, Berkshire analyst at KBW, said Geico may benefit from having a full-time CEO focused solely on catching up to rival Progressive . “All else equal, we think competing with the remarkable brain trust at PGR requires a full-time CEO (Mr. Combs had also been one of BRK’s top investment managers), so we see this development as a positive,” Shields said in a note. What it means for the stock Berkshire watchers say the changes may be only the beginning of broader reshuffling as Buffett’s influence gradually recedes. “No matter how desirable consistency is – change is inevitable when a 50-year-plus CEO steps back,” said Shields. “We expect more turnover in coming months, since the cache of working for Mr. Buffett’s successor is not (at least yet) the same as working for Mr. Buffett himself.” KBW downgraded Berkshire to a sell-equivalent underperform rating in October, citing “concerns surrounding macro uncertainty and Berkshire’s historically unique succession risk.” Shares of Berkshire fell more than 2% on Monday following the announcements. The stock is up about 10% this year, trailing the S & P 500. BRK.A YTD mountain Berkshire Hathaway YTD Questions linger The Combs exit also reignites the key investor question hanging over Berkshire about capital allocation. “Capital allocation has been the single biggest area of uncertainty when it comes to Berkshire, and the Combs exit will raise further questions about how the company plans to manage its massive cash/stock holdings in the post-Buffett era,” Adam Crisafulli, founder of Vital Knowledge, said in a note. UBS said it now expects Ted Weschler, who has co-managed investments alongside Combs for more than a decade, to take over management of Berkshire’s public equity portfolio. “Ted Weschler … is now in line to manage BRK’s investments,” UBS analysts wrote in a note. In 2024, Buffett confirmed that Abel will have the final say on all Berkshire’s investing decisions when the Oracle of Omaha is no longer at the helm. He seemed to allude to the decision that Abel will control the Berkshire public stock portfolio. “I would leave the capital allocation to Greg and he understands businesses extremely well,” Buffett said at Berkshire’s annual meeting. “If you understand businesses, you’ll understand common stocks.” — CNBC’s Michael Bloom contributed reporting.
