Greg Abel, newly installed as Berkshire Hathaway's chief executive, used his inaugural annual letter to shareholders to underscore continuity with Warren Buffett's stewardship and to promise a cautious approach to capital deployment. In an 18-page, single-spaced letter issued Saturday, Abel, 63, committed to preserving what he described as a "fortress-like" balance sheet and to maintaining the core values that defined his predecessor's six-decade transformation of Berkshire from an ailing textile firm into a trillion-dollar conglomerate.
Abel made clear he does not intend to quickly spend Berkshire's substantial cash reserves. The company holds a near-record cash balance of $373.3 billion, which Abel said provides ample "dry powder" for opportunities but will not prompt a change in the company's longstanding policy against paying dividends — a stance Buffett also opposed. Berkshire likewise has not repurchased its own stock since the spring of 2024.
"I recognize how you want us to succeed together, and to do so in the right way," Abel wrote, adding that his role is to make sure "our liquidity levels and capital deployment remain intentional and deliberate." The language was designed to reassure investors about both the conservative capital posture and the deliberate nature of future investments.
Abel also paid tribute to Buffett, 95, who remains chairman and continues to work from Berkshire's offices five days a week. Abel called Buffett a "remarkable" CEO and described him as "arguably the greatest investor of all time, with generations benefiting from his investment acumen." Abel noted that investing in Berkshire had long been a vote of trust in the founder, and that trust now rests with the company under new leadership.
Market reaction to the leadership transition has been uneven. Berkshire shares have lagged the Standard & Poor's 500 index since Buffett unexpectedly said in May that he would step aside as chief executive. Abel's letter did not attempt to mimic Buffett's oft-noted writing style and investor charm, but some market observers said it provided the degree of continuity shareholders were seeking.
Cathy Seifert, an analyst at CFRA Research, said Abel needed to demonstrate continuity and to signal that Berkshire's franchise would keep operating despite the change at the top. She said the letter met that objective. Dan Hanson, who manages more than $6 billion as head of the quality equity team at Neuberger Berman, said the letter should dispel doubts about Abel's suitability to lead the company.
The letter also made clear Abel does not intend to remake Buffett's approach to building Berkshire. He reiterated support for the decentralized operating model in which Berkshire's many subsidiaries run largely independently. He indicated a willingness to remain in his role for a lengthy period, noting that in 20 years he would have had "just a fraction of the tenure that Warren had."
Abel said Berkshire will invest in durable, well-managed businesses that are within its circle of competence, and will avoid "businesses that undermine the fabric of society or could jeopardize Berkshire's reputation." He did not expand on specific exclusions, though observers suggested the remark could encompass emerging issues that management perceives as reputational risks.
Abel was candid in pointing to areas within Berkshire that need improvement. He singled out a performance gap at railroad unit BNSF versus industry leaders, calling the difference "too wide," and described operational shortcomings at Shaw, the flooring company, as "self-inflicted," noting they impaired quality and service. "Each business is accountable to its CEO, who is expected to pursue operational excellence relentlessly and close performance gaps," Abel wrote. Industry portfolio managers said those criticisms amount to a clear mandate for management teams to improve.
On the investment side, Berkshire has not yet appointed a successor to Buffett as chief investment officer. Abel stated that responsibility for equity investments "ultimately resides with me as CEO." He did, however, indicate that long-time portfolio manager Ted Weschler, who manages about 6% of Berkshire's equity portfolio, will continue to play a broader role in evaluating major investment opportunities and supporting the company in other ways.
Financial results released alongside the letter showed declines in profit, influenced in part by sizable writedowns. Berkshire took writedowns on its roughly 27% stakes in both Kraft Heinz and Occidental Petroleum. Fourth-quarter operating profit fell 30% to $10.2 billion, driven by weaker income from insurance operations such as Geico. Net income for the quarter declined 3% to $19.2 billion, which included a $4.5 billion writedown related to Occidental, offset in part by gains among equity holdings led by Apple and American Express.
For the full year, operating profit decreased 6% to $44.49 billion, while net income was down 25% to $66.97 billion. Buffett has long instructed investors to look beyond Berkshire's net income swings, noting how accounting rules for equity investments can distort short-term figures. Full-year revenue was essentially flat at $371.44 billion.
Abel also addressed a number of specific business developments. Fruit of the Loom, one of Berkshire's better-known consumer businesses, reduced its workforce by 6,000 employees last year as revenue declined. At its PacifiCorp utility, litigation stemming from wildfires that burned more than 500,000 acres in 2020 remains a significant issue. Victims of those fires have alleged PacifiCorp failed to de-energize lines, and the utility has reached more than $2.2 billion in settlements while facing an additional $50 billion of filed wildfire claims.
Abel said Berkshire accepts responsibility when it causes wildfires but will contest unjustified claims in court. "PacifiCorp is not an insurer of last resort and should not be treated as a deep pocket," he wrote, adding that pairing accountability with principled opposition to unwarranted liability is vital to preserving the regulatory compact that governs utilities.
Overall, Abel's first shareholder letter sought to reassure investors that Berkshire's balance-sheet conservatism, operating structure and investment discipline will persist under his leadership. At the same time, he made clear his expectations for operational performance across subsidiaries and signaled that certain liabilities and writedowns will weigh on near-term earnings results.