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- Greg Abel paid homage to Warren Buffett in his first shareholder letter as Berkshire Hathaway CEO.
- Abel pledged to abide by core Buffett values such as capital discipline and integrity.
- He celebrated Berkshire's Japanese bets, bemoaned its Kraft Heinz wager, and hailed Ted Weschler.
Greg Abel paid tribute to Warren Buffett and reassured Berkshire Hathaway shareholders he wouldn't do anything drastic as their new CEO in his first letter to them, published together with the company's fourth-quarter earnings and annual report on Saturday.
Buffett handed Berkshire's reins to Abel at the start of this year, ending a six-decade run during which he transformed the failing textile mill into a sprawling conglomerate worth more than $1 trillion.
The legendary investor oversaw a 6,100,000% return for Berkshire shareholders between 1965 and 2025, trouncing the S&P 500's total return of 46,100% including dividends. His compounded annual gain of 19.7% was nearly double the index's 10.5% figure over a 60-year timeframe.
"Warren is obviously a very hard act to follow," Abel wrote, continuing Buffett's decades-long tradition of penning an annual shareholder letter.
Berkshire's new boss dedicated the first section of his letter to Buffett, praising everything from his patience and judgment to his investing prowess, legacy as an educator, track record as a CEO, and the unique company he built with the late Charlie Munger.
Abel used the letter to properly introduce himself to shareholders, and even tried to inject some of Buffett's trademark wit.
"I will not be your CEO for the next 60 years as simple arithmetic makes that — shall we say — an ambitious plan," he quipped.
More of the same
Abel made it clear to shareholders that he "gets it" — he understands what makes Berkshire special and has no plans to ruin it.
He walked through what he called Berkshire's "foundational values": its decentralized model, integrity, financial strength, capital discipline, risk management, and operational excellence.
Abel lingered on the topic of capital discipline, showing he's aware of how much scrutiny Berkshire has received for hoarding more than $370 billion of liquid assets.
He signaled there won't be any rushed deals or immediate dividend payouts on his watch. He described Berkshire's cash pile as both its rainy-day fund and its "dry powder" for stock purchases and acquisitions, but said he'll remain disciplined in spending it "regardless of the size" of the company's reserves.
Digging into the details
Abel's letter contained several key nuggets for close followers of Berkshire.
First, he described its Kraft Heinz investment as "disappointing" with a return "well short of adequate," echoing Buffett's uncharacteristic bashing of the food giant.
Second, Abel broke out the five stakes in Japanese companies purchased by Buffett a few years ago. The dedicated table showed Berkshire paid a total of $15.4 billion for positions worth a combined $35.4 billion at December's close, and collected $862 million in dividends from them last year.
Third, he revealed that Ted Weschler now oversees about 6% of Berkshire's investments after assuming control of the recently departed Todd Combs' portion of the company's portfolio.
Abel also positioned Weschler as one of his key deputies, writing that his "impact extends beyond these investments" to weighing in on big opportunities and Berkshire's businesses, and providing other support.
Finally, he signaled a shift to a bigger brain trust at Berkshire. Instead of Buffett and Munger holding court for the entire Q&A at Berkshire's annual meeting, as they did for many years, Abel will field questions with Berkshire's insurance chief, Ajit Jain, and later with Katie Farmer and Adam Johnson, two of his top deputies.
