Warren Buffett (Trades, Portfolio) has pledged to dispose of his roughly $140 billion stake in Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) by 2034 as he accelerates the charitable distribution of a fortune overwhelmingly tied to the company. On Tuesday, Buffett announced a new round of share donations to foundations connected to his family, while excluding the Gates Foundation from his midyear giving for the first time in two decades. Buffett has donated about $48 billion to the Gates Foundation since 2006, but the organization was absent from this year's recipient list after US Department of Justice documents released earlier this year renewed scrutiny of Bill Gates (Trades, Portfolio)' ties to Jeffrey Epstein. The shift may draw investor attention because it marks a significant change in Buffett's long-running philanthropic strategy as he prepares to distribute his remaining Berkshire holdings.
Buffett, Bill Gates (Trades, Portfolio) and Melinda French Gates established the Giving Pledge in 2010 to encourage wealthy individuals and families to donate most of their fortunes to charitable causes. Buffett accepted that challenge himself, while the continued expansion of the US economy and the long-running bull market have increased the value of many commitments made under the initiative. Most of Buffett's wealth comes from his ownership interest in Berkshire, which he has said represents roughly 99.5% of his net worth. Buffett also played a prominent role during the late-2000s recession by providing support to Goldman Sachs Group, General Electric and Swiss Re, while rejecting requests from Lehman Brothers Holdings.
The latest donations will direct 9 million Berkshire Class B shares to the Susan Thompson Buffett Foundation, named after Buffett's late wife, and 1 million Class B shares each to the Sherwood Foundation, the Howard G. Buffett Foundation and the NoVo Foundation, which are managed by his children. Buffett plans to convert Berkshire Class A shares, which closed Monday at $744,850, into Class B shares, which ended the session at $496.85, leaving him with 188,290 Class A shares and 1,162 Class B shares after the gifts. Berkshire shares have declined 8% since Buffett announced in May of last year that he planned to step down as chief executive officer. Investors may view the combination of Buffett's planned departure and the gradual disposal of his stake as an important consideration for Berkshire's leadership transition and long-term shareholder base.