New Berkshire Hathaway CEO Issues First Letter to Shareholders

Greg Abel, the new CEO of Berkshire Hathaway, released his inaugural shareholder letter promising to maintain the company's financial strength and continue Warren Buffett's legacy. The 63-year-old executive said he won't rush to spend the company's massive $373.3 billion cash reserves and will uphold the investment principles that made Berkshire successful.

Greg Abel, who recently took over as CEO of Berkshire Hathaway, issued his first annual shareholder letter Saturday, working to reassure investors that he will continue the successful strategies established by Warren Buffett while putting his own leadership mark on the massive conglomerate.

The 63-year-old executive committed to preserving Berkshire’s “fortress-like” financial foundation and promised he won’t hastily spend the company’s massive $373.3 billion cash reserves. Abel indicated this substantial war chest provides significant “dry powder” for future opportunities, while confirming he has no intention of starting dividend payments – a stance that aligns with Buffett’s long-held position. The company hasn’t bought back its own shares since spring 2024.

“I recognize how you want us to succeed together, and to do so in the right way,” Abel stated in his comprehensive 18-page letter. “My role is to ensure our liquidity levels and capital deployment remain intentional and deliberate.”

Abel expressed deep respect for his predecessor, describing the 95-year-old Buffett as “remarkable” and noting that the legendary investor continues serving as chairman while maintaining his daily presence at company headquarters five days weekly.

“Warren Buffett is arguably the greatest investor of all time, with generations benefiting from his investment acumen,” Abel emphasized. “To invest in Berkshire has long been a vote of trust in our founder – a trust that now rests with Berkshire.”

Since Buffett’s unexpected announcement in May about stepping down from the CEO role, Berkshire’s stock performance has lagged considerably behind the Standard & Poor’s 500 index.

While Abel’s writing style differs from Buffett’s distinctive approach, CFRA Research analyst Cathy Seifert believes the letter should comfort worried investors.

“He needed to show a degree of continuity, that the Berkshire franchise would continue despite the change in leadership, and it would be business as usual,” Seifert explained. “In my opinion, he hit the mark.”

The communication demonstrated Abel’s commitment to preserving Buffett’s six-decade transformation of Berkshire from a struggling textile manufacturer into a trillion-dollar empire encompassing car insurance giant Geico, BNSF railroad, and numerous other insurance, manufacturing, energy and retail operations.

“If there were any doubts about whether Greg was the right individual to take the reins, the letter should dispel them,” stated Dan Hanson, who manages over $6 billion as head of Neuberger Berman’s quality equity team.

The company also announced declining earnings, influenced by writedowns on its roughly 27% ownership positions in both Kraft Heinz and oil producer Occidental Petroleum.

Operating profits for the fourth quarter dropped 30% to $10.2 billion as insurance division earnings, including Geico, decreased significantly.

Overall net earnings declined 3% to $19.2 billion, impacted by a $4.5 billion Occidental writedown, though this was partially offset by gains from major holdings including Apple and American Express.

For the complete year 2025, operating earnings fell 6% to $44.49 billion, while net earnings decreased 25% to $66.97 billion. Buffett consistently advised shareholders to disregard net income variations, which reflect accounting requirements for equity investments.

Annual revenue remained essentially flat at $371.44 billion, and Seifert noted Abel “teed up an expectation that reinsurance and commercial insurance growth may be nonexistent” in 2026.

Fruit of the Loom, among Berkshire’s most recognizable subsidiaries, eliminated 6,000 positions last year amid falling sales, according to company reports.

Abel assured shareholders that Berkshire’s corporate culture and principles will persist “in perpetuity,” indicating no modifications to its decentralized management approach where individual businesses operate with minimal corporate oversight.

He also hinted at his long-term commitment, suggesting that even after 20 years in the role, he will have served “just a fraction of the tenure that Warren had.”

The new CEO pledged to focus investments on stable, well-run companies that Berkshire comprehends while working to “avoid businesses that undermine the fabric of society or could jeopardize Berkshire’s reputation.”

Though Abel didn’t specify what types of businesses he meant, Seifert suggested he might have been referencing artificial intelligence companies.

Abel addressed ongoing challenges facing PacifiCorp, the company’s utility subsidiary dealing with extensive litigation related to devastating Oregon and California wildfires that consumed over 500,000 acres in 2020.

Numerous wildfire victims have blamed PacifiCorp for failing to deactivate power lines during dangerous conditions. The utility has agreed to settlements exceeding $2.2 billion but still confronts an additional $50 billion in wildfire-related claims. Abel emphasized that while Berkshire accepts responsibility for fires it causes, the company will vigorously contest unfounded legal claims.

“PacifiCorp is not an insurer of last resort and should not be treated as a deep pocket,” Abel declared. “Accountability, paired with principled opposition to unwarranted liability, is essential to preserving the regulatory compact that governs utilities.”

Abel demonstrated more direct criticism than Buffett typically showed toward underperforming Berkshire subsidiaries.

He characterized the performance difference between BNSF railroad and industry leaders as “too wide,” while describing “self-inflicted” problems at Shaw flooring company that have damaged quality and customer service.

“Each business is accountable to its CEO, who is expected to pursue operational excellence relentlessly and close performance gaps,” Abel stated regarding Berkshire’s non-insurance operations.

Hanson from Neuberger Berman commented: “Those are fighting words.”

Berkshire has not appointed a chief investment officer to succeed Buffett in that capacity, though Abel confirmed that responsibility for stock investments “ultimately resides with me as CEO.”

Abel indicated that veteran portfolio manager Ted Weschler, who oversees approximately 6% of Berkshire’s stock portfolio, will continue in an expanded “broader role” evaluating major investment opportunities and providing additional support to the organization.