Taking the Torch from the "Oracle of Omaha"! Abel Faces His First Test with Berkshire (BRK.A.US) Annual Shareholder Letter

Berkshire Hathaway (BRK.A.US)’s new CEO, Greg Abel, faces many challenges as the successor to the renowned billionaire Warren Buffett. This Saturday, Wall Street will see how he handles one of Berkshire’s unique issues: the highly anticipated annual shareholder letter.

95-year-old Buffett stepped down as CEO earlier this year, ending a sixty-year career. During those six decades, he transformed a nearly bankrupt textile company into a conglomerate worth over $1 trillion, with numerous insurance companies, BNSF Railway, and dozens of energy, industrial, and retail businesses. While still chairman, Buffett announced last November that he would “no longer speak out” as Abel took over the company.

Buffett is hard to imitate, and 63-year-old Abel will not be his clone.

Whether answering questions alongside Buffett at the annual shareholder meeting in Omaha, Nebraska, or in the 2022 letter on environmental sustainability—written at Buffett’s request—Abel tends to focus more on the specific operations of Berkshire’s businesses when communicating with investors.

His letter may follow suit, though perhaps not as eloquently as Buffett’s highly anticipated annual speech. The letter offers an opportunity to showcase Berkshire Hathaway’s future direction—and perhaps even to gradually reduce its massive $381.7 billion cash reserve. “Warren Buffett is considered the Mark Twain of shareholder letters,” said Evan Ponder, founder of investor relations firm Triunfo Partners and a professor at USC’s Annenberg School for Communication and Journalism. “At Berkshire, Abel has never been an easy person to approach. The shareholder letter is a great chance for him to establish his personal style, tone, and strategy.”

Abel joined Berkshire in 2000 and has served as vice chairman for the past eight years, overseeing dozens of non-insurance businesses.

People generally believe he has a deep understanding of Berkshire and is committed to preserving its corporate culture. “Management credibility has always been a key part of Berkshire’s strategy,” said Greg Miller, a professor of financial communication at the University of Michigan’s Ross School of Business. “Buffett’s reputation lends credibility to the company’s operations and decisions. Abel needs to take over and continue this tradition.”

Stock Performance Lagging

Berkshire’s Q4 and full-year results will be released alongside Abel’s letter. Operating profit for 2025 is expected to approach the record $47.44 billion set a year earlier.

However, since Buffett announced his retirement plan on May 3 last year, Berkshire’s stock has fallen 8%, while the S&P 500 has risen 22%.

Analysts have long believed that cash accumulation hampers performance. Berkshire has sold stocks for 12 consecutive quarters and has not repurchased shares for five straight quarters. Its stock trades at about 1.5 times its book value.

Berkshire did not immediately respond to requests for comment.

No other CEO’s words— including JPMorgan’s Jamie Dimon or BlackRock’s Larry Fink—are as carefully analyzed as Buffett’s letters. Every letter he has written since 1978 is archived on the company’s website.

Buffett often adopts a straightforward, approachable tone. In 2008, he wrote about the excesses that led to the collapse of the U.S. housing market: “Only when the tide goes out do you discover who’s been swimming naked.”

Even so, even if Abel mainly describes Berkshire, he can also look elsewhere. “Buffett’s letters are not just about Berkshire’s operations—they also reveal how Buffett views the world. People want to know how Greg Abel sees the world,” Miller said. “He must carefully balance maintaining the legacy and establishing his own position.”

Berkshire’s Unsolved Mysteries

Abel’s letter may also answer some unresolved questions.

Among them is Vice Chairman Ajit Jain, 74, whom Buffett calls an “indispensable” top talent. After decades leading Berkshire’s insurance operations, his continued tenure remains a focus.

Berkshire Hathaway has yet to officially appoint a Chief Investment Officer to succeed Buffett. Buffett personally managed the company’s roughly $300 billion stock portfolio. Potential successors include Ted Weschler, a key member who helped manage the portfolio, and Greg Abel himself, with the possibility of both serving as co-CIOs.

Meanwhile, plans to reduce cash include resuming stock buybacks or paying Berkshire’s first dividend since 1967. “Greg will seize the opportunity— that’s a hallmark of Berkshire,” said Steven Check, a long-term Berkshire investor at Check Capital Management in Costa Mesa, California.

Ponder suggested Abel should use the letter to demonstrate his commitment to Buffett’s values— a focus on long-term shareholder value—and outline his investment philosophy for the next decade.

This means he is not just the new on-field leader of Berkshire. “Following Buffett is like taking the football from Tom Brady,” said McRee Sykes, a portfolio manager at Gabelli Funds in Laie, New York, referring to the retired quarterback. “As long as Abel communicates effectively and provides clear, transparent business updates, he can do well in building shareholder confidence.”