Finish of ‘The Berkshire Method’? Combs’ departure is not solely massive change as Buffett transition nears

(That is the Warren Buffett Watch e-newsletter, information and evaluation on all issues Warren Buffett and Berkshire Hathaway. You’ll be able to enroll right here to obtain it each Friday night in your inbox.)

Todd Combs’ shock departure from Berkshire Hathaway received a lot of the consideration when it was introduced this week.

There have been additionally, nonetheless, a number of extra personnel adjustments in Monday’s three-page information launch that sign the corporate is shifting towards a extra typical construction as Warren Buffett prepares to switch his CEO title to Greg Abel in lower than three weeks.

Combs goes to JPMorgan Chase subsequent month to go a $10 billion “Strategic Funding Group” for the corporate’s new $1.5 trillion “Safety and Resiliency Initiative” to assist “corporations improve their development, spur innovation and speed up manufacturing, primarily in america.”

Combs has been on JPM’s board since 2016 however is leaving that publish as he takes the brand new job.

In its information launch, JPM’s Chairman and CEO Jamie Dimon known as Combs “one of many biggest traders and leaders I’ve identified.”

In Berkshire’s announcement, Warren Buffett is quoted as saying “JPMorgan, as normally is the case, has made a superb resolution,” praising Combs for making “many nice hires at GEICO.”

Combs, who’s 54 years previous, joined Berkshire in 2010 as a portfolio supervisor.

In 2020, he received an extra function as CEO of Geico, Berkshire’s auto insurer, including to hypothesis he may turn out to be Buffett’s future successor.

At Could’s annual assembly, insurance coverage Chief Ajit Jain mentioned Combs “has finished an incredible job for us when it comes to turning round” Geico’s operations, citing enhancements in “matching fee to threat” and incorporating telematics, the digital monitoring of how policyholders drive, in setting charges.

However Jain added, “I nonetheless assume we have to do extra in expertise.”

The duty of doing extra in expertise at Geico now belongs to its new CEO, Nancy Pierce, who strikes up from chief working officer. She’s been on the insurer since 1986, when she began as a claims affiliate.

The query of who might be assuming Combs’ duties as portfolio supervisor, nonetheless, remains to be open.

Buffett has been saying Abel may have general accountability for the portfolio, but it surely’s not clear how a lot of that accountability might be delegated to the opposite portfolio supervisor, Ted Weschler.

Berkshire may additionally rent a number of extra portfolio managers and Buffett himself, in his function as chairman, may assist fill the hole left by Combs.

Historically, Berkshire has been opaque about who’s been liable for the smaller holdings in its portfolio and hasn’t mentioned a lot concerning the portfolio managers’ monitor information.

In an electronic mail to Buffett Watch, Hudson Worth Companions’ Christopher Davis urges Berkshire to “turn out to be extra clear concerning the roles and obligations of Abel and Wechsler in managing the general public fairness portfolio.

“All of us love the ‘Berkshire method’, however there must be some concessions to the very fact it’s now a trillion-dollar enterprise present process its first management transition.”

A number of sides of that transition are shifting the corporate away from the famously decentralized “Berkshire method.”

Greg Abel has already been exercising extra administration oversight over the non-insurance working corporations than Buffett ever did.

Now a few of them are getting an extra layer of administration.

Adam Johnson, the chairman and CEO of NetJets, has been appointed to the newly created function of “President of the Shopper Merchandise, Service and Retailing companies of Berkshire Hathaway.”

Calling him an “completed chief with a confirmed means to ship long-term shareholder worth,” Abel says in Monday’s information launch that Johnson will “help the excellent CEOs of our 32 shopper merchandise, service and retailing companies, and uphold Berkshire’s tradition and values.”

The remaining non-insurance subsidiaries, together with BNSF, Berkshire Hathaway Power, and Pilot, will nonetheless be reporting on to Abel.

Berkshire can also be getting its first normal counsel.

Michael O’Sullivan served in that function at Snap Inc. since 2017 after working towards legislation at Munger, Tolles & Olson for greater than twenty years.

Up till now, Berkshire has turned to outdoors legislation corporations to deal with its authorized issues.

(I would not be stunned to see Berkshire add investor, media, and authorities relations departments to its notoriously low-overhead Omaha HQ sooner or later subsequent yr.

I do not assume, however, that Berkshire might be paying a dividend so long as Buffett continues to return into the workplace.)

Lastly, in a extra conventional transition, Chief Monetary Officer Marc Hamburg will retire subsequent June after 40 years at Berkshire.

Within the information launch, Buffett mentioned Hamburg has been “indispensable” and “has finished extra for this firm than a lot of our shareholders will ever know.”

His successor might be Berkshire Hathaway Power CFO Charles Chang.

It is loads of change for an organization that hasn’t modified a lot through the years.

Keefe, Bruyette & Woods analyst Meyer Shields instructed the Wall Avenue Journal, “There’s a lot emotional funding within the persistence of Berkshire as a tradition that when you could have decent-sized adjustments, that is going to trigger extra fear than jubilation over the corporate’s dynamism. That is not why individuals personal Berkshire Hathaway.”

KBW downgraded Berkshire shares to “underperform” earlier this yr, partly as a result of Buffett’s impending departure.

Each the A and B shares weathered the storm fairly effectively this week, falling virtually 1%, though they’re nonetheless down greater than 7% from their all-time highs in Could, simply earlier than Buffett revealed he would step down as CEO on the finish of the yr.

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AUDIENCE MEMBER: What has been the one finest funding of your careers?

WARREN BUFFETT: In all probability, when it comes to what it is finished already and the place it is going to go over time, in all probability the one finest funding was the primary half of GEICO, which we bought for $40 million. Now the second half value us 2 billion. I am glad I did not purchase it in thirds. (Laughter)

However, you already know, that 40 million will — for half the corporate — will end up very effectively.

However GEICO — a few of our companies have development potential, some do not. And we do not require development potential as a part of a enterprise.

If a enterprise makes good cash and we are able to use it to purchase different companies, one of many benefits of the Berkshire system is we’ve a tax environment friendly and type of frictionless method of shifting cash to the very best alternatives. And GEICO, internally, has nonetheless monumental prospects for development.

CHARLIE MUNGER: Nicely, however GEICO, in any case, value $2 billion for the second half and —

WARREN BUFFETT: Proper.

CHARLIE MUNGER:  — a major variety of tens of hundreds of thousands for the primary half.

Now the search bills that introduced us Ajit Jain, now there was an funding that actually paid a dividend.

I can consider no increased return funding that we have ever made that was higher than that one. (Applause)

And I believe that is a superb life lesson. In different phrases, getting the suitable individuals into your system can ceaselessly be extra vital than anything. 

BRK.A inventory value: $748,887.00

BRK.B inventory value: $499.52

BRK.B P/E (TTM): 15.97

Berkshire market capitalization: $1,077,426,505,703

Berkshire Money as of September 30: $381.7 billion (Up 10.9% from June 30)

Excluding Rail Money and Subtracting T-Payments Payable: $354.3 billion (Up 4.3% from June 30)

No Berkshire inventory repurchases since Could 2024.

(All figures are as of the date of publication, until in any other case indicated)

Berkshire’s high holdings of disclosed publicly traded shares within the U.S. and Japan, by market worth, based mostly on the newest closing costs.

Holdings are as of September 30, 2025, as reported in Berkshire Hathaway’s 13F submitting on November 14, 2025, apart from:

The total listing of holdings and present market values is accessible from CNBC.com’s Berkshire Hathaway Portfolio Tracker.

Please ship any questions or feedback concerning the e-newsletter to me at alex.crippen@cnbc.com. (Sorry, however we do not ahead questions or feedback to Buffett himself.)

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Additionally, Buffett’s annual letters to shareholders are extremely really helpful studying. There are collected right here on Berkshire’s web site.

— Alex Crippen, Editor, Warren Buffett Watch

(Correction: Fixes misspelling of Combs’ title.)