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Abel: Berkshire's culture and values 'remain unchanged and will continue into perpetuity'
In his first letter to Berkshire Hathaway shareholders, new CEO Greg Abel didn't try to emulate Warren Buffett's folksy, conversational writing style.
He did, however, emphasize he won't be making major changes to the way the company has operated for decades under Buffett's leadership.
At the top of his letter, Abel called Buffett "arguably the greatest investor of all time," and acknowledged that "Warren is obviously a very hard act to follow."
Berkshire Vice Chairman Greg Abel speaks with shareholders during the Berkshire Hathaway Inc. annual shareholders' meeting, in Omaha, Nebraska, U.S., May 2, 2025.
Abel wrote that last month, he "sent a letter to our employees to emphasize that Berkshire's cultures and values remain unchanged and will continue into perpetuity."
"We are committed to strengthening the great legacy" built by Buffett and Charlie Munger, "ensuring it endures through our commitment to excellence."
Abel said Munger's comment at the 2021 annual meeting that "Greg will keep the culture" will "forever resonate with me" as a "reminder that our culture is our most treasured asset, a call to maintain what defines Berkshire, and a challenge to ensure our culture continues."
No change on buybacks or dividends
Any investors hoping Abel would be more specific about criteria for buybacks didn't get satisfaction.
His sentence on the subject could have been written by Buffett himself: "We will buy back Berkshire shares when they trade below our estimate of intrinsic value, conservatively determined, ensuring that repurchases enhance per-share value for continuing owners."
There were no buybacks during the fourth quarter, extending a streak that goes back to May 2024.
Abel also disappointed any shareholders hoping he might reverse Buffett's longstanding opposition to using some of Berkshire big cash pile to pay a dividend.
"Our approach to cash dividends continues to be that Berkshire will not pay dividends so long as more than one dollar of market value for shareholders is reasonably likely to be created by each dollar of retained earnings."
Abel vowed to maintain Buffett's "fortress-like balance sheet, ensuring Berkshire's foundation is never compromised."
Calling the cash Berkshire's "dry powder," he acknowledged there will "undoubtedly be incremental opportunities to deploy our owner's capital without compromising Berkshire's resilience. My role is to ensure our liquidity levels and capital deployment remain intentional and deliberate."
"Many times in Berkshire's history, some observers have suggested that our substantial cash position signals a retreat from investing. It does not. We continue to evaluate many opportunities and will remain patient and disciplined in pursuing the right ones for the benefit of our owners."
Greg Abel speaks during the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska on May 3, 2025.
Berkshire still has a lot of cash
Berkshire's overall cash decreased 2.2% in the fourth quarter to $373.3 billion as of December 31.
Excluding BNSF's cash and subtracting T-bills payable, it increased 4.1% to $369.0 billion.
Operating earnings fell 29.8% from last year's fourth quarter, coming in at $10.2 billion. Insurance underwriting was down 54%, insurance investment income fell 25%, while BNSF gained 5.3% and manufacturing, service and retailing edged 3.3% higher.
Ajit, Kraft, and the who's running the portfolio
Abel praised Ajit Jain's "judgment and disciple" over four decades but didn't provide any clues on who may ultimately succeed him as Berkshire's insurance chief.
He also gave no indication on whether Berkshire still plans to reduce or eliminate its stake in Kraft Heinz now that its new CEO shelved plans to split the company in two, saying only the return "has been well short of adequate."
Abel did confirm the responsibility for Berkshire's equity portfolio "ultimately resides with me as CEO," with Ted Weschler continuing to manage about 6% of the investments, including those previously overseen by Todd Combs who left in December for a new job at JPMorgan.
Warren Buffett and Greg Abel walkthrough the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska on May 3, 2025.
New additions to annual meeting Q&A
There will be some new faces joining the Q&A sessions at the company's shareholder meeting on May 2 in Omaha.
Abel and Jain will do the morning session as would be expected, but the afternoon session will include Abel, BNSF's Katie Farmer, and Adam Johnson, who runs NetJets and is president of consumer products, service, and retailing, a new position created late last year.
In an email to Warren Buffett Watch, Gabelli Funds portfolio manager Macrae Sykes praises Abel for covering all of Berkshire's major segments in the letter, saying he "showed humility" and "expressed clarity in communication and confidence in his role as the new CEO."
He also likes the inclusion of Farmer and Johnson in a Q&A. "Nice to see the delegation of communication responsibilities and emergence of leadership beyond Greg and Ajit."
Christopher Davis of Hudson Value Partners tells me we may be seeing "the first 'Abel Rule' added to the Berkshire playbook," a preference for immediate full control of private businesses it acquires.
He cites Abel's comment that while Berkshire first invested in Pilot in 2017, its ability to manage it was contractually delayed until 2023. "That mistake will not happen again."
Davis also thinks Abel saying the company may purchase large blocks of shares from major holders "when the opportunity presents itself," supports his thesis there will be a "very large buyback program" of Buffett's shares after he dies "as his children put the money to work in philanthropy."
Noted Berkshire analyst sees a decade of 10% to 12% annual returns
Bloomstran believes Abel may be more aggressive with Berkshire's cash than Buffett has been.
"It's likely that Berkshire under Greg Abel's leadership will commit a large portion of today's outsized cash reserves at materially higher returns than are presently being earned on U.S. Treasuries."
