(BRK.A), (BRK.B)
In his first annual letter as CEO of Berkshire Hathaway, Greg Abel pays tribute to Warren Buffett’s extraordinary legacy while outlining how he intends to carry the company forward. Abel emphasizes that Buffett’s greatness extends beyond investing skill: alongside Charlie Munger, he built Berkshire into a durable enterprise defined by disciplined capital allocation, decentralized management, and a deep partnership with long-term shareholders.
Abel highlights Buffett’s patient, selective investment style—likened to baseball legend Ted Williams waiting for the perfect pitch—as a model for Berkshire’s enduring success. But he stresses that the company’s real strength lies in its culture: treating shareholders as partners, communicating candidly, and focusing relentlessly on long-term intrinsic value per share.
Now entrusted with leadership, Abel underscores continuity rather than change. Berkshire’s culture and foundational values—decentralization, integrity, financial strength, capital discipline, risk management, and operational excellence—remain intact. He reaffirms the company’s decentralized model, in which operating managers have wide autonomy paired with strict accountability, and he reiterates Buffett’s long-standing principle that reputation is paramount.
Financially, Berkshire remains exceptionally strong. In 2025, operating earnings reached $44.5 billion, and the company generated $46 billion in operating cash flow. Its insurance operations produced an outstanding 87.1% combined ratio, and insurance float grew to $176 billion. Abel credits the disciplined underwriting culture shaped by Vice Chairman Ajit Jain as central to this performance.
Outside insurance, major subsidiaries including BNSF railroad and Berkshire Hathaway Energy delivered solid cash flows while facing industry-specific challenges. Abel notes progress in operational improvements at BNSF and careful capital deployment at the energy business amid wildfire risks and rising electricity demand.
Capital allocation remains the centerpiece of Berkshire’s strategy. Abel reiterates the company’s preference for owning high-quality businesses with durable advantages and strong managers, citing 2025 acquisitions such as OxyChem and Bell Laboratories as examples. Berkshire continues to concentrate a large portion of its equity portfolio in a handful of long-term holdings, including Apple Inc., American Express, Coca-Cola, and Moody’s Corporation, as well as major Japanese trading houses. Share repurchases remain an important tool when shares trade below intrinsic value, while dividends will be paid only if retained earnings cannot create superior long-term value.
Abel also addresses governance and leadership transitions, noting the planned retirement of CFO Marc Hamburg and the appointment of new corporate leaders, while reaffirming Berkshire’s commitment to transparent, simultaneous communication with all shareholders.
Throughout the letter, Abel’s message is steady and deliberate: Berkshire’s scale may slow the pace of compounding, but its culture, balance sheet strength, insurance core, and disciplined capital allocation provide a foundation for continued long-term growth. Honoring Buffett’s legacy, Abel positions himself not as a departure from the past, but as a steward of the same enduring principles designed to guide Berkshire for decades to come.
© 2026 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.