"Berkshire starts to change after 100 days of the 'new king's ascension'"

Greg Abel has taken over Berkshire Hathaway for more than a hundred days. While continuing the company’s core culture, the new CEO is reshaping the world’s most watched investment group with a more proactive management style.

On April 17, The Wall Street Journal published an in-depth report focused on the various changes brought by Berkshire Hathaway’s new CEO Greg Abel during his first hundred days in office.

Since taking office in January this year, Abel has started adjusting the stock portfolio, restarted the share buyback plan, increased investment in the Japanese market, and promoted his longtime deputy.

Compared to his predecessor, Warren Buffett, Abel is more proactive and critical in examining the company’s businesses and stock holdings. He is expected to take a tougher stance on underperforming subsidiaries, stock holdings, and even executives.

In an interview, Abel talked about Buffett and the late partner Charlie Munger, saying:

We have some differences, mainly in style and obviously in problem-solving approach, but our fundamental values have always been the foundation on which our company is built.

For investors, the real test of Abel’s strength may not have arrived yet. Berkshire currently holds a record $373.1 billion in cash, and how he will act decisively before the next deep downturn will be the ultimate test the market sets for the new leader.

Management Style: From “Passive Delegation” to “Active Involvement”

Abel officially assumed the CEO role in January this year, but the actual transfer of power began as early as last May.

At that time, the 95-year-old Buffett announced at Berkshire’s annual meeting his retirement at the end of the year. Abel said:

That was the real start of the transition.

Buffett had openly stated that even if some managers failed to meet standards, he preferred to avoid direct confrontation and keep them on board.

Abel is completely different. According to reports citing familiar sources, he is not afraid to take necessary actions to improve business, including firing executives when needed.

Lawrence Cunningham, author of the Berkshire series of books, revealed that about a year ago, he asked Abel whether he would follow Buffett and Munger’s practice of leniency towards lagging subsidiaries. Abel’s reply was:

I won’t do that. I believe in autonomy, I believe in decentralization. But if there are laggards, I will call them out directly.

Occidental Petroleum CEO Vicki Hollub has a direct sense of this. Berkshire holds significant shares in Occidental Petroleum; she describes Abel as “likes to be involved, is hands-on, and dives into business details,” and also says he is a “tough negotiator, but honest and fair.”

Buffett himself has sent signals to internal and external parties: Abel is now truly in charge. When business people write to Buffett seeking transaction opportunities, Buffett replies but forwards the original letter and his reply to Abel.

Zero Tolerance for Subsidiary “Laggards”

In managing wholly owned subsidiaries, Abel also displays a different attitude from Buffett.

Berkshire has rarely sold any wholly owned subsidiaries in its history, with only two precedents: the sale of newspaper business in 2020 and the closure of textile business in 1985. However, if subsidiaries fail to meet expectations, selling is not impossible.

On core business lines, Abel continues to devote a great deal of time visiting subsidiary management, especially BNSF Railway and Berkshire Hathaway Energy, the latter being where Abel was CEO for many years.

He has also spent the past year learning the intricacies of Berkshire’s insurance business and maintains close communication with the core insurance figure Ajit Jain. Jain is expected to continue leading the insurance business, and the company has a succession plan for him.

In daily operations, Abel spends several days each week driving two hours from his home in Des Moines, Iowa to work in Omaha. The rest of the time, he frequently uses Berkshire’s NetJets business jet to visit company management teams around the country in person.

Reports say he has no plans to move to Omaha, at least until his child graduates high school. Abel says:

If you look back at my first hundred days, the focus on operational excellence has never waned.

Portfolio: Clarifying “Core” and “Non-core” Holdings

On investment strategy, Abel is reviewing and restructuring the stock portfolio accumulated during Buffett’s era.

WallstreetCN mentions that, in his first annual letter to shareholders on February 28 this year, Abel clearly listed Apple, American Express, Coca-Cola, and Moody’s as “core” holdings. These four stocks make up more than half of Berkshire’s portfolio, with extremely low cost bases.

Bank of America and Chevron were not listed as core holdings. Data shows that over the past 18 months, Berkshire has reduced its Bank of America holdings by about half to 517 million shares, and Chevron holdings are valued at about $20 billion.

Abel stated in the letter that Berkshire holds “meaningful positions” in “a few other companies.” These positions will have “more dynamic” capital allocation and could become core holdings in the future.

In personnel arrangements, Abel has cleared out stocks managed by Todd Combs. Combs has recently left to join JP Morgan; he was one of the two investment managers recruited by Buffett.

Reports citing insiders reveal that Abel is unlikely to recruit someone else to help manage the portfolio; he himself will lead stock investment decisions.

In his annual letter, Abel reiterated that Berkshire will continue its “concentrated holdings” investment style, restarted the stock buyback plan which had stalled since 2024, and deepened Berkshire’s layout in Japan by acquiring shares in a Japanese insurance company.

Cash Deployment: The Ultimate Test of $373.1 Billion

For many Berkshire shareholders, Abel’s real test lies in Berkshire’s unprecedented cash reserves.

So far, Berkshire holds a record $373.1 billion in cash reserves. Whether he can decisively use this capital for large-scale acquisitions during an economic downturn will ultimately determine how the market judges Abel.

Chris Bloomstran, CIO of Semper Augustus Investments and longtime Berkshire shareholder, admits:

I can’t assess how good he really is until we go through another deep recession. The requirement for Greg from shareholders should be: you must be willing to put $300 billion to work. The expectation is that he will do so, and be more proactive than Warren was in his later years.

In a certain sense, this also reflects the collective mindset of Berkshire’s shareholder group: they trust Abel, but that trust needs time and results to be fulfilled.

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