Greg Able has released his first annual report as CEO of Berkshire Hathaway now the Uncle Warren has stepped back. (Uncle Warren has "stepped back" to only working 5 days a week in the office as the Chairman, the man is a machine).
His whole letter is a good read, but particularly the part on Berkshire's culture and values (which I've cut and pasted below). Greg is not shy in coming forward "Risk management is central to Berkshire. The CEO is responsible for serving as Chief Risk Officer – there is no more important duty.", he is quick to praise others as Warren did " This approach is core to our insurance business, and Ajit is simply peerless at doing it", and is as ruthlessly frank as Charlie was " Our investment in Kraft Heinz has been disappointing. Even after considering the preferred equity component in our original Heinz investment, our return has been well short of adequate.".
For my money (shares held) the handover has gone as well as anyone could have hoped, it's early days but I think the heart and soul of Berkshire Hathaway is in good hands. It's biggest challenge remains it's enormous size and the increasing mathematical difficulty that brings in trying to outgrowing the market (what a problem to have).
Anyway, it won't float many peoples boat from an investment idea perspective ( it's got to be about the perfect antithesis for Aussy small cap land), but it's a great read on what good leadership and culture looks like.
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Our Culture
Our culture begins with a partnership attitude. Our shareholders are our partners whose trust we have earned and must work to keep. Their interests are at the center of our decision-making.
This attitude goes well beyond Berkshire’s corporate office in Omaha. It extends across our operating businesses, where employees embrace an ownership mindset, managing our shareholders’ assets as if they were their own. We think in decades, act with discipline, and uphold our commitments. Stewardship is embedded in how we operate, reinforcing that our culture is a system for generating long-term performance, not just a set of beliefs.
Charlie’s comment on May 1, 2021, that “Greg will keep the culture” will forever resonate with me. It was 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.
When I led Berkshire Hathaway Energy (BHE), Berkshire’s culture influenced how we operated. When capital was allocated or underlying risks were assessed, Warren’s questions consistently cut to the heart of the issue. Beyond that, we were entrusted with real autonomy to run the business, always focusing on our customers, and taking a long-term view. That owner’s mindset is expected from every Berkshire leader.
Our Foundational Values
The foundational values that follow are statements of principle that we embrace fully and strive every day to achieve.
Decentralized Model
We seek the best managers to run our operating businesses, who in turn lead talented teams. We operate a decentralized model with autonomy grounded in deserved trust. We minimize bureaucracy to provide our managers the independence to focus relentlessly on their business. In return, we expect accountability and integrity in performance. This autonomy attracts exceptional people to Berkshire.
As I transitioned to Vice Chairman – Non-Insurance Operations in 2018, the leaders of those operating businesses shared a similar question: will the decentralized model and their responsibilities change? I assured them I had lived the culture of autonomy paired with accountability and seen the results. Decisions are made faster, with better knowledge and greater conviction, when they are made by those who are closest to the business and have accountability for its outcomes. This will not change. Our CEOs will never have to navigate layers of bureaucracy or have short-term earnings expectations dictated to them, leading to long-term value destruction.
Our decentralized approach is a competitive advantage, attracting managers who thrive on autonomy and deliver on accountability. Berkshire must have leaders that reflect its principles, and not principles that fit individuals.
Integrity
We uphold Berkshire’s reputation for integrity, as demonstrated by alignment between how we think, what we say, and what we do. We make decisions that uphold our culture, communicate with candor and transparency, and deliver on our commitments. The result is a reputation that is earned, not claimed, through cumulative principled conduct. Every action reflects a deliberate effort to deepen the trust placed in Berkshire.
For over 25 years, at each shareholder meeting we played a clip from Warren’s 1991 Salomon Brothers Congressional testimony: “Lose money for the firm, and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless.” Our commitment to integrity has always been steadfast and uncompromising. We know integrity is not a quality you admire on a shelf; it is an active quality that must be earned, re-earned, and maintained daily.
We will encounter business successes and setbacks. When we fail, we will say so. Doing the right thing also means rectifying our errors. A great example of both is BNSF’s resolution in 2025 of a longstanding dispute with the Swinomish Indian Tribal Community over crude oil shipments across Tribal lands. The BNSF decisions that sparked the dispute were made long ago, but the current BNSF leadership built a partnership rooted in communication, understanding, and respect. BNSF acknowledged its past mistakes and apologized, paving the way for mutually beneficial agreements that allow it to meet customer needs while operating safely on Tribal lands.
4 Across our operating businesses, we make choices every day about how we conduct ourselves. We have hundreds of thousands of employees who are good people and act with integrity and do the right thing. But in any large organization a small minority will fail to meet our standards. We will not tolerate such behavior. When it occurs, we will act decisively and ruthlessly to address it.
Protecting our integrity and reputation is a never-ending journey. You can rest assured that we will remain relentless in this effort.
Financial Strength
We maintain a fortress-like balance sheet, ensuring Berkshire’s foundation is never compromised. We preserve this financial strength by using debt sparingly and prudently. Our substantial liquidity enables us to meet our obligations even under the most adverse conditions and to respond swiftly when opportunities arise.
We are committed to maintaining exceptional financial strength. Our balance sheet is a strategic asset to be deployed at the right time. It allows us to act decisively, invest when others are tentative or fearful, and stand firm when financial storms roll through.
We uphold Berkshire’s financial resilience and independence by holding limited levels of debt. We will remain an asset, not a risk, to America and the global financial system. Our cash and U.S. Treasury holdings now exceed $370 billion. While some of this capital is required to support our insurance operations and protect Berkshire against extreme scenarios, it also constitutes our dry powder.
There will undoubtedly be incremental opportunities to deploy our owners’ capital without compromising Berkshire’s resilience. My role is to ensure our liquidity levels and capital deployment remain intentional and deliberate. We will always aim for ownership of productive businesses over U.S. Treasuries.
Capital Discipline
We deploy our shareholders’ capital to opportunities that generate rewards commensurate with their risk. When we expand existing operations, acquire new operating businesses, invest in equity securities, and repurchase Berkshire stock, we evaluate each opportunity based on its potential to grow Berkshire’s intrinsic value per share over a time horizon measured in perpetuity.
Berkshire’s capital allocation principles and strategy guide us in identifying opportunities:
• Invest in businesses that we thoroughly understand, with durable advantages and long-term economic prospects;
• Partner with high integrity leaders who understand their customers and act like owners;
• Avoid businesses that undermine the fabric of society or could jeopardize Berkshire’s reputation;
• Act quickly and concentrate our capital in a few high conviction ideas; and
• Maintain discipline and let compounding unfold.
These criteria enable us to effectively and efficiently evaluate opportunities that come our way. Despite our substantial size, we take pride in a nimble culture where big investment opportunities can be confidentially shared with us, with a prompt response assured (and if we like it, no financing contingency attached). We quickly say “no” to those that do not align with our principles, and pursue those that do, knowing there will be many more of the former than the latter.
Many times in Berkshire’s history, some observers have suggested that our substantial cash position signals a retreat from investing. It does not. We continue to evaluate many opportunities and will remain patient and disciplined in pursuing the right ones for the benefit of our owners.
In 2025, our approach resulted in Berkshire announcing the acquisition of two very different businesses: OxyChem and Bell Laboratories.
OxyChem is a well-run industrial chemicals business we first encountered through our investment in Occidental. The chlorine and caustic soda it produces serve essential markets, led by construction and core industrial uses. Management prioritizes efficient execution over volume, supported by an integrated asset base and access to low-cost raw materials. For Berkshire, this translates into cash flows from a compelling addition to our operating businesses.
Last year, Warren received a letter from Steve Levy, Bell Laboratories’ CEO, asking that we look at the family-owned business he manages for the daughters of founder Malcolm Stack. Steve’s letter was perfect. Bell Laboratories meets a persistent need: rodent control. In Steve’s words, it possesses “high operating margins, very good historical growth and future growth potential, easy to understand and always needed, and a strong management team.” In our words: a business with durable advantages and long-term economic prospects run by excellent managers. We only wish it had been ten times bigger.
These investments now join Berkshire’s strong set of operating businesses. Some of them require little incremental investment and return excess cash to Berkshire; others present compelling investment opportunities that will compound over time.
Share repurchases are another important capital allocation option. 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. We may also purchase large blocks of shares directly from major holders when the opportunity presents itself. These purchases allow shareholders to own an incrementally larger piece of Berkshire’s businesses, without deploying any additional capital of their own.
Our approach to cash dividends continues to be that Berkshire will not pay dividends so long as more than one dollar of market value for shareholders is reasonably likely to be created by each dollar of retained earnings. On an annual basis, the Board reviews our policy.
Our capital discipline guides us, whether we seek to purchase an entire business, a portion of equity in a publicly traded company, or our own shares. We maintain this approach regardless of the size of our cash and U.S. Treasury holdings. We will assess value carefully, act patiently, and hold for the long term – preferably forever.
Risk Management
We identify risks and strive to manage the level of risk across our organization. Our approach is decentralized, suited to each operating business’s scale and complexity. We focus on risks that could threaten Berkshire’s reputation, financial strength, or ability to realize opportunities for the long term.
Risk management is central to Berkshire. The CEO is responsible for serving as Chief Risk Officer – there is no more important duty.
An important part of fulfilling that responsibility is having the best on our team. When it comes to risk, Ajit wrote the playbook. His rigor in managing and pricing risk sets the standard in insurance. Any contract can be subject to legal challenge, and new coverages are particularly dangerous. We often set a price today for a cost that may not be known for many years. Pricing insurance risk correctly is essential, and we will walk away when the price is wrong. This approach is core to our insurance business, and Ajit is simply peerless at doing it.
As a result, our insurance operations are a global powerhouse, able to accept risks others cannot, and pay claims without hesitation. Our unmatched financial strength allows us to retain underwriting risk and preserve the full economics for our owners, rather than dilute it through the purchase of reinsurance.
Of course, understanding and managing risk is also essential for our non-insurance businesses. Each must thoroughly assess its specific risks and plan for new risks before pursuing new or incremental opportunities.
Across all our businesses, our responsibility is to understand the risks and actively manage them.
Operational Excellence
We pursue operational excellence across our operating businesses. Our employees continuously strive to exceed customer expectations, improve efficiency to better compete and prepare for challenges to our operating models, and reinvest prudently in their operations. We recognize that performance fluctuates year to year, so we assess a business’s success not by short-term results but by its ability over the long term to maintain and strengthen its competitive position and improve its economic prospects.
Operational excellence at Berkshire is not a program. It is the result of disciplined decision making across our businesses. That work starts with safety and carries through to how we serve customers, make products, and compete – every day.
In February 2025, Precision Castparts’ response to a major fire at its Jenkintown, Pennsylvania facility showed Berkshire at its best. All employees on site were evacuated safely. The team then worked closely with first responders, providing site layouts and identifying potential hazards. In the aftermath, Precision Castparts supported the local volunteer fire department, assisted the city, and conducted extensive environmental testing that confirmed the area was safe.
At the same time, the fire created a significant operational challenge. The facility produced more than 700 parts that were sole-sourced and critical to major aerospace customers. Mark Donegan, Precision Castparts’ CEO, and his team quickly redistributed production across U.S. and international sites, doing so without compromising safety, quality, or delivery standards. No customer experienced a production line stoppage. The episode reflected our model at work: decentralized leadership, clear accountability, and exceptional execution under pressure.
The daily pursuit of excellence must be never-ending. By focusing on customers, efficiency, and continuous improvement, we create value over the long term.
Taken together, the foundational values listed above built Berkshire, and equip us to succeed in the decades ahead. While we have set them out explicitly this year, we will publish them as an attachment to future letters, with each letter discussing how we practiced those values across Berkshire.
Their impact is also very evident in the operating performance of our businesses today.
-End
The full report can be found at www.berkshirehathaway.com (annual reports - 2025).
So Warren has now formally stepped down as CEO, as announced earlier 6this year. Such a slow and formalised succession is exactly what you would expect from one of (if not the) greatest investors of all time. This CBNC article summarises the new era well.
Published Thu, Jan 1 20269:31 AM EST
Warren Buffett and Greg Abel walkthrough the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska on May 3, 2025.
David A. Grogen | CNBC
The investing world’s north star is beginning to dim.
Warren Buffett has handed over the CEO reins to Greg Abel after a six-decade run that turned an unremarkable textile company into one of the most powerful compounding engines in market history, leaving investors grappling with how singular that achievement really was, even as he remains chairman of Berkshire Hathaway.
When Buffett took control of Berkshire in the mid-1960s, its shares traded around $19. By the end of 2025, a single Class A share was worth over $750,000.
From 1964 — the year before Buffett took control of Berkshire — to 2024, the one-of-a-kind conglomerate delivered a compounded annual gain of 19.9%, nearly double the S&P 500′s 10.4%, resulting in an overall return of more than 5.5 million percent, according to the company’s latest annual report. The shares added another 10% to that return in 2025.
The record was built on an unusually spare formula: use insurance float as a source of low-cost capital, buy businesses with durable cash flows and allow time to do most of the work. That approach produced long-held stakes in companies such as Coca-Cola and American Express, while Berkshire expanded into railroads, utilities and manufacturing through wholly owned subsidiaries.
“If it was that easy to do again, somebody would be doing it,” Bill Stone, chief investment officer at Glenview Trust Company and a Berkshire shareholder, said. “You think about the duo that having Charlie Munger as your partner, it’s just hard to imagine that coming together again anytime soon.”
As Buffett relinquishes the helm, investors are increasingly focused on what disappears with him. Seth Klarman, founder of the Baupost Group, called Buffett “an American role model” and said his retirement represents more than a leadership transition.
“The world of investing will be different without Warren Buffett at the helm of Berkshire,” Klarman said in a tribute.
Buffett has said he’s “going quiet” as he steps back, signaling a reduced public presence even as he remains chairman. Abel will assume responsibility for Berkshire’s annual shareholder letters, a tradition Buffett began in 1965 that became essential reading on Wall Street for its plainspoken lessons on markets, management and capital allocation. Buffett will keep penning a Thanksgiving message, however.
The annual letters were one pillar of Buffett’s influence. The other was Berkshire’s annual shareholder meeting. Often dubbed “Woodstock for Capitalists,” the gathering drew tens of thousands of investors to Omaha, Nebraska, each year for hours of unscripted Q&A. The event cemented Buffett’s role not just as a steward of capital, but as a steady public voice investors trusted to put market upheaval into perspective.
Berkshire Hathaway Shareholder Bill Stone reflects on end of an era as CEO Warren Buffett steps down
Buffett also rejected many Wall Street conventions. Berkshire never split its stock, discouraging speculation and cultivating a shareholder base oriented toward decades rather than quarters. The company declined to issue earnings guidance and gave operating managers wide autonomy, while capital allocation decisions remained centralized in Omaha.
“Warren, as chairman, will be an advisor to Greg, a cultural anchor, and a real long term thinker,” said Ann Winblad, managing director at Hummer Winblad Venture Partners and longtime Berkshire shareholder, on CNBC’s “The Exchange.” “Will the company fundamentally change in its strategies? No. ..The culture of Berkshire Hathaway, which is what I’ve invested in, which is patient, long term, careful and decisive investing, will probably still remain.”
The company held a record $381.6 billion in cash at the end of September, underscoring both its financial firepower and Buffett’s caution in a richly valued market. Berkshire has also been a net seller of equities for 12 straight quarters, a rare and sustained retreat that reflects limited opportunities at its scale.
Shareholder attention is shifting to a less settled part of the succession plan: the fate of its $300 billion equity portfolio. With no obvious successor possessing a comparable record in public equities, some analysts say Berkshire may ultimately scale back active stock selection, particularly given the size and concentration of the portfolio.
Buffett has also repeatedly cautioned shareholders against mistaking volatility for failure.
“Our stock price will move capriciously, occasionally falling 50% or so as has happened three times in 60 years under present management,” he wrote. “Don’t despair; America will come back and so will Berkshire shares.”