A Closer Look at Greg Abel's First Annual Letter to Berkshire Hathaway Shareholders

“Integrity is not a quality you admire on a shelf,” wrote Abel. “It is an active quality that must be earned, re-earned, and maintained daily.”

I am, admittedly, a pretty friendly audience for this stuff — but I absolutely LOVED Greg Abel’s first letter to Berkshire Hathaway shareholders. A reaffirmation of the foundational ground rules that have guided the conglomerate for the past six decades, while also diving into much-appreciated detail on individual subsidiaries.

Or, in other words, the perfect mix of big picture principles and practicality.

This was Abel’s opportunity to properly introduce himself to Berkshire shareholders — to reassure them that his mission is more of stewardship than seismic change — and he did not disappoint.

Until now, during his few on-stage appearances at annual meetings, Abel mostly limited himself to nuts-and-bolts answers about Berkshire’s operating businesses. Here, for the first time, we get a fuller picture — his perspective on the entire empire, capital allocation, and the nigh-impossible challenge of succeeding Warren Buffett.

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There was a lot to like about Greg Abel’s first letter as Berkshire Hathaway CEO.

Such as…

Abel is very aware of the immense responsibility that now rests on his shoulders. “Warren is obviously a very hard act to follow,” he wrote. For many years, everything Berkshire revolved around Warren Buffett. He did not just steer the ship, but was the reason many investors climbed aboard in the first place. They placed their trust (and capital) in Buffett — and were handsomely rewarded. But, now, that trust must rest on Berkshire itself. The conglomerate must shine on its own and not just in the reflected glow of Buffett’s halo. In his letter, Abel repeatedly uses the word “stewardship” — of nurturing and growing what has already been built — to describe his new role.

Abel plans to stick around for a while. He laughed off the possibility of replicating Buffett’s sixty years of service, but included a line that demonstrated he sees the CEO chair as a lifelong calling and not just a pitstop along the road to retirement. “Twenty years from now,” he wrote, “when I will have just a fraction of the tenure that Warren had, my intention is that you — or your descendants — will be proud that your company is stronger than ever.” At Berkshire, endurance has always been the ultimate competitive advantage — and Abel seems to be eyeing at least a twenty-year run.

The words of Charlie Munger ring in Abel’s ears. “Charlie’s comment on May 1, 2021, that ‘Greg will keep the culture’ will forever resonate with me,” admitted Abel. That’s in reference to Charlie inadvertently letting the succession cat out of the bag at the 2021 AGM, when it was still a closely-guarded secret. Abel called the endorsement “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”.

Speaking of culture, Berkshire’s foundational values will never change. Last month, after stepping into the CEO role, Abel sent a letter to Berkshire employees in which he reaffirmed that the conglomerate’s culture and values will “remain unchanged and will continue into perpetuity”. He named the five key pillars as decentralization, integrity, financial strength, risk management, and operational excellence — and argued that these are “not the result of our success, but the reason for it”.

Decentralization is still the name of the game. Abel draws a finer line than simply delegating to the point of abdication; instead, granting autonomy based on deserved trust and paired with real accountability. Managers will continue to run their businesses with wide latitude because they are the ones closest to the customers, the competition, and the realities on the ground. “This will not change,” wrote Abel. Plus, it attracts exactly the kind of exceptional leaders Berkshire needs — those who crave both the authority to steer their own ship and the responsibility that comes with it.

Berkshire will continue to operate with the utmost discipline. Abel spent a lot of time walking readers through the conglomerate’s operations and performance in 2025 — which I will dive into next week with a full review of the annual report — including the big earnings decline in the insurance segment. He did not sound worried, though, and reminded readers that Berkshire only writes policies when it can do so profitably, on terms that make sense for the long haul. Current conditions call for a pullback in business, rather than chasing volume at inadequate rates. Even if that results in some rough-looking numbers from time to time. Ajit Jain and co. will NEVER compromise their standards for the sugar-high of short-term success.

A clearer look at how Abel evaluates business performance. The new Berkshire CEO makes repeated reference to net operating cash flow when discussing various facets of the conglomerate — comparing the current number to its five-year average. Abel also admits a preference for using operating margin to judge BNSF Railway. (A metric in which Berkshire’s railroad still trails its competitors by “too wide” a distance.)

And, in one of the more interesting moments of the letter, he expressed dissatisfaction with the multi-step structure of the Pilot acquisition. “We first invested in Pilot in 2017,” wrote Abel, “however, our ability to manage it was contractually delayed until 2023. That mistake will not happen again.”

The much-missed (at least by me) equity investments section is back — complete with cost basis information for several large holdings. Abel highlighted four key domestic stock holdings — Apple, American Express, Coca-Cola, and Moody’s — and indicated there would only be “limited activity” in these positions going forward. He didn’t use the phrase permanent holding, but that seemed to be the gist. Notably, there are several big names that did not make the list — like Bank of America, Chevron, and Occidental Petroleum. (All of which are bigger holdings than Moody’s.) Abel did add that he views the five Japanese trading houses as investments “comparable to our major U.S. holdings in importance and long-term value creation opportunity”.

Abel sounds positively Buffett-like in terms of the capital allocation levers. Especially when it comes to share repurchases — of which there were none in the fourth quarter. “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,” he wrote. Dividends, meanwhile, remain off the table for the time being. “Berkshire will not pay dividends,” said Abel, “so long as more than one dollar of market value for shareholders is reasonably likely to be created by each dollar of retained earnings.”

Any other purchases — either of wholly-owned businesses or equity stakes on the open market — will be made with the long run in mind. “We will assess value carefully, act patiently, and hold for the long term — preferably forever.”

No unrealistic expectations here. Abel echoed his predecessor’s frequent warning that Berkshire has simply grown too large to post outsized returns. “At Berkshire’s scale,” he wrote, “the math of compounding works against us — a reality long understood and best acknowledged plainly.” The days of routinely trouncing the market are behind us; not because the principles have failed, but because Berkshire’s capital base is now measured in hundreds of billions rather than millions. As such, “our opportunity is improvement in per-share value over the long term, even when progress comes in smaller increments”. Probably as safe a sign as any that Abel will repurchase shares in a big way when the price is right.

Berkshire’s rather laconic communication strategy is here to stay. “Berkshire will always communicate with all shareholders at the same time and through the same channels to give each of you the necessary information to assess Berkshire’s performance,” wrote Abel. “We concentrate on quality, not frequency. If a significant issue arises, you will hear from me, but it will not be through quarterly commentary, given our long-term horizon.” No selective leaks to favored analysts, no earnings calls with scripted platitudes, no monthly updates to fill uncomfortable silences. The annual letter — and annual meeting — will remain Berkshire’s forum of choice.

Shareholders will hear more from the .400 hitters who keep Berkshire humming. The Q&A session at this year’s annual meeting will look a little different — with a couple of new faces making their debut on stage. The morning session will still open with an update on Berkshire’s performance from the CEO and then Abel and Ajit Jain will field questions until the lunchtime break. Then, in the second session, Abel will be joined by BNSF CEO Katie Farmer and NetJets CEO Adam Johnson. “In that way,” wrote Abel, “we will be able to cover Berkshire’s insurance and non-insurance operations [across the two sessions].” And this might just be the start — with Abel hinting that we could see a rotating cast of characters in future years, as he shines a much-deserved spotlight on Berkshire’s deep bench of managerial talent.