Labor’s big win and Buffett bows out – What investors need to know
In this week’s video insight, I cover two major headlines that hit papers this week: Labor’s sweeping win in the federal election and Warren Buffett’s retirement as CEO of Berkshire Hathaway.
Labor’s second-term agenda is set to reshape sectors like transport, energy, healthcare, and housing. With budget plans and reform drawing the line between winners and losers.
Meanwhile, Buffett’s departure marks the end of an era – appointing Greg Abel as his successor of Berkshire Hathaway. Buffett assures he will remain involved when needed, hinting that his influence at Berkshire isn’t over just yet.
Transcript:
Hi. I’m Roger Montgomery, and welcome to this week’s video insight. Today, we’re unpacking two stories that broke over the weekend, Labour’s 2025 Australian Federal Election win and Warren Buffett’s retirement from Berkshire Hathaway. So, let’s dive in.
First, Labor’s landslide victory. Securing a second term with a stronger majority, Labor is expected to push a bold socialist agenda creating clear winners and losers.
In transport, Labor’s vehicle efficiency policy, effective July this year, accelerates the Electric Vehicle (EV) shift. Financing and auto financing firms like Fleet Partners, Smart Group, and PepperMoney could see a surge in EV leasing demand. Car dealers like Eagers Automotive might get a short-term boost too.
Some analysts have suggested parts supplies like Bapcor (ASX: BAP) face long term pain as EVs needing less maintenance and parts increase in market share by 2030. But investors should note, EVs represent just 0.8 per cent of the national fleet, and the rise of hybrids actually benefits Bapcor. Those who believe fuel distributors like Ampol and Viva Energy are at risk as petrol demand fades need to also think seriously about timelines. It’ll take decades and decades for there to be far fewer internal combustion engine vehicles on our roads.
In energy and resources, Labor’s A$7.3 billion energy transition plan is a positive, but perhaps not a game changer. Aluminium smelters adopting renewables could lift Rio Tinto (ASX:RIO), South 32, and Illumina Limited while green iron support might benefit BlueScope Steel, Fortescue, and BHP. But any benefit is probably going to be marginal.
AGL Energy potentially gains from a A$4,000 household battery subsidy – boosting installations.
Healthcare is hot, with Labor’s A$8.5 billion Medicare expansion targeting 90 per cent bulk billing by 2030. Diagnostic firms like Sonic Healthcare, Healius, and Integral Diagnostics could see higher patient volumes. A A$573 million women’s health investment further supports this trend, but private insurers like Medibank might face margin compression if premium hikes are capped.
Labor’s A$690 million plan to cut the Pharmaceutical Benefits Scheme (PBS) medical costs to A$25 could drive prescription volumes for pharmacy chains like Sigma and EBOS – especially in regional areas.
In housing, Labor’s A$10 billion pledge for a 100,000 first home buyer homes and A$800 million help to buy scheme will spark the market. Developers like Mirvac, Stockland, and landholders like Ingenia could see more deals. Meanwhile, banks like the Commonwealth, Westpac, and lenders like Pepper Money might benefit from mortgage growth.
But waiving lenders mortgage insurance for low deposit buyers could potentially hit Hillier Group and QBE Insurance, risking their revenue.
Supermarkets like Woolworths (ASX: WOW), Coles, and Metcash face headwinds from Labor’s anti price gouging push and a mandatory grocery code – with the Australian Competition and Consumer Commissions (ACCC) scrutiny also squeezing margins.
While union friendly reforms including a 2027 non-compete ban and same job, same pay laws could raise costs by two to three per cent for contractor heavy firms like BHP (ASX: BHP), Downer EDI, and Qantas. A revived federal Environmental Protection Australia (EPA) might also hike compliance costs for many companies.
The other big news on the weekend was Warren Buffett’s announcement that he will retire, stepping down as Berkshire Hathaway’s CEO by year end. Greg Abel will take over.
Buffett turned a failing textile mill into a US$1.6 trillion empire, delivering 19.8 per cent annual returns since 1965 and crushing the S&P 500.
Abel, who’s 62, has run Berkshire’s non-insurance units like the BNSF Railroad for over 20 years. Buffett’s keeping his fortune in Berkshire shares, announcing he won’t be selling a single share, and said he’ll stick around for when he is needed and especially when market events cause opportunities to deploy vast amounts of money. In fact, he said, “the time has arrived where Greg should become the CEO of the company at year end. And I want to spring that on the directors”, adding, “I will still hang around and conceivably be useful in a few cases”, and, “I could be helpful, I believe, in that in certain respects, if we ran into periods of great opportunity, I think Berkshire has a special reputation that when there’s times of trouble for the government that we are an asset and not a liability”. I think he’s hinting that he’s not going anywhere.
Of course, Abel’s investing track record is unproven. With a record US$347 billion cash pile, his deal-making in a tough market – think tariff risks and high valuations – will be under scrutiny.
Berkshire’s 18.9 per cent gain in 2025 beat the S&P 500’s three point three per cent drop, but losing Buffett’s market intuition could prove disruptive. It certainly will be for those investors who mimicked Buffett’s buys and sells. His shareholders’ letters were certainly investor gold, and his portfolio moves like Japanese firms recently, Apple, or (Build Your Dreams) BYD sparked entire trends.
I’ll leave it there because markets will very soon return their attention to Trump and tariffs. In the meantime, continue to follow us on Facebook and X.
Disclaimer
The Montgomery Fund and the Montgomery [Private] Fund owns shares in Rio Tinto, BHP, and Woolworths. The Montgomery Small Companies Fund owns shares in Bapcor. This video insight was prepared on 7 May 2025 with the information we have today, and our view may change. It does not constitute formal advice or professional investment advice. If you wish to trade Rio Tinto, BHP, Woolworths or Bapcor, you should seek financial advice.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
He is also author of best-selling investment guide-book for the stock market, Value.able – how to value the best stocks and buy them for less than they are worth.
Roger appears regularly on television and radio, and in the press, including ABC radio and TV, The Australian and Ausbiz. View upcoming media appearances.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
