Berkshire Hathaway’s Abel Vows Firm Will Thrive Beyond Buffett
(Bloomberg) — Berkshire Hathaway Inc. Chief Executive Greg Abel has vowed to keep Warren Buffett’s guiding principles intact and sought to reassure investors that the company will outlast the legendary manager.
Abel began his opening letter to shareholders, published Saturday as part of the company’s annual report, by invoking billionaire investor Buffett, who has led the company for more than six decades by focusing on seeking value and investing for the long term.
“Warren is certainly a very difficult act to follow,” Abel, 63, wrote.
He called Buffett “arguably the greatest investor of all time” but said his mentor had an equally impressive feat of turning Berkshire into an enduring venture alongside longtime business partner Charlie Munger. The CEO promised that the firm’s core values (capital discipline, integrity and investment for the long term) would not change.
“Twenty years from now, when I will only have a fraction of the tenure that Warren has, it is my intention that you or your grandchildren will be proud that your company has become even stronger,” Abel wrote.
Abel reaffirmed Berkshire’s shareholder return policy and said the firm would buy back its own shares if, after consulting with Buffett, it believed its shares were trading below their intrinsic value.
He also said the firm would refrain from paying dividends and would not divest as long as “there is a reasonable likelihood that each dollar of retained earnings will generate more than one dollar of market value for shareholders.”
‘Cult of Personality’
The letter was a simple review of the company’s operations, as Abel tried to strike a balance between finding his own voice while staying true to the company’s ethos.
“Abel is trying to overcome the cult of personality that has prevented investment firms from surviving a leadership transition,” said Christopher Davis of Hudson Value Partners.
Abel also said the firm does not plan to change the way it communicates with investors. Berkshire, the only public company of its size without an investor relations function, does not hold any investor-focused events outside of its annual meetings.
“We focus on quality, not frequency,” Abel wrote. “You will hear from me if a significant issue arises, but given our long-term horizon, it will not be through quarterly statements.”
For Buffett fans, Abel’s first letter to shareholders marks the end of an era. The billionaire’s pearls of wisdom, aphorisms and life advice have turned his trove of letters into a must-read archive.
Cathy Seifert, an analyst at CFRA Research, said of Abel’s letter: “It was something I expected in the sense that it would show due respect to Warren Buffett as an individual, but also an emphasis that Berkshire Hathaway’s existence, values, operating policies and mindset will continue.”
While Abel’s letter overwhelmingly signaled continuity, it also brought about at least one adjustment.
Breaking with tradition at Berkshire, the firm’s next annual meeting in May will include other executives from the Berkshire empire: BNSF’s Katie Farmer and NetJets’ Adam Johnson. Investors and analysts have long called for the company to shed light on its deep executive suite.
The company reported fourth-quarter earnings in a separate statement on Saturday. Berkshire said operating profit fell nearly 30 percent in Buffett’s last quarter as CEO, while underwriting earnings fell more than 54 percent. The company warned of potential challenges the insurance industry may face due to strong competition and increasing demands.
Berkshire also took a $4.5 billion impairment charge in the quarter. Last year, Kraft Heinz Co. and Occidental Petroleum Corp. recorded a gain of $8.3 billion on its holdings.
“Our investment in Kraft Heinz was disappointing,” Abel said in his letter. “Even after considering the preferred equity component of our initial Heinz investment, our return was not sufficient.”
Berkshire’s cash pile fell to $373.3 billion from $381.7 billion in the previous quarter. Low interest rates have affected the firm’s income from its cash pile; Insurance interest and other investment income decreased by 11.9% compared to last year. He became a net seller of stock during this period, selling $3.2 billion worth of stock.
Berkshire’s annual insurance brokerage pretax earnings in 2025 are down 17% from a year ago. Geico, the main contributor to Berkshire’s insurance results, reported pretax underwriting earnings that fell roughly 13% for the year to $6.8 billion, driven in part by increased advertising spending to win more customers.
Rail unit BNSF’s operating earnings rose 5.4% to $1.3 billion in the fourth quarter. Berkshire’s utilities business, which operates Pacificorp, MidAmerican and NV Energy, saw a 5.2% drop in operating earnings in the quarter to $691 million.
The firm refused to buy back its own shares for the sixth consecutive quarter, even though shares fell 6.5 percent after Buffett announced in May that he would step down as CEO at the end of 2025.
(Additional comments from shareholder letter and analysts added.)
More stories like this available Bloomberg.com
