Berkshire Hathaway B's Abel commits to sticking to Buffett's "framework" in the first shareholder letter

2026-02-28 16:38:43

Investing.com - Greg Abel assured shareholders in his first annual letter as CEO of Berkshire Hathaway B that the company will adhere to the “framework” established by Warren Buffett and Charlie Munger, emphasizing that culture, capital discipline, and financial strength are the enduring pillars of the company.

Replacing Buffett as CEO, Abel stated that an operational framework centered on decentralization, integrity, capital discipline, and a fortress-like balance sheet will continue to guide decisions across Berkshire’s insurance, railroad, energy, and manufacturing businesses.

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Abel pointed out that the insurance business remains at the core of Berkshire’s model, highlighting strict underwriting discipline and growth in float, which reached $176 billion by year-end. The company’s operating earnings for 2025 are projected at $44.5 billion, down from $47.4 billion in 2024 but above the five-year average, while generating $46 billion in operating cash flow.

Abel reaffirmed Berkshire’s preference for maintaining ample liquidity, with cash and U.S. Treasury holdings exceeding $370 billion to ensure resilience and opportunistic capital allocation. He emphasized that share repurchases will continue when stock prices are below intrinsic value, and as long as retained earnings generate more than one dollar of market value per dollar, dividends are unlikely to be paid.

Abel echoed Buffett’s long-standing investment philosophy, emphasizing long-term ownership of high-quality companies and concentrated equity investments, while acknowledging that Berkshire’s scale makes excess growth increasingly difficult.

By the end of 2025, Berkshire held a record $373.1 billion in cash and U.S. Treasuries, a 4% increase from the previous quarter after accounting for payables related to short-term government debt purchases.

During this period, the company also did not repurchase its own stock, extending the pause in buybacks for the sixth consecutive quarter.

Additionally, the company reported that operating profit in the fourth quarter declined nearly 30% year-over-year, mainly due to underperformance in the insurance underwriting business.

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