2025 Annual Report - Greg Abel's first annual letter

[Charlie]

I liked this sentence most: "Near-term opportunities are significant, and BHE will pursue them selectively."

 

P/B is at 1,515.

 

Berkshires´ meritocracy focus is in operating and investing in wonderful companies.

 

The folksy entertaining part of the annual letter got a liitle bit reduced. It is his first letter. 

 

 

 

 

Edited March 1 by Charlie

[Hamburg Investor]

A lot of good writings here, thanks!

 

Just one add: I like that he doesn‘t try to imitate Buffett. He has to find his own way. I really liked the annual letters of Buffett of course, but that’s the past now. 
 

The small errors highlighted here by some of you might be a bad sign, but I don’t think so. At least for now. But definitely something to have an eye on in the future. For now I am much more happy with that than getting some AI „enhanced“ text. To me it seems he’s showing himself and his view and that’s a good sign. It‘s hard to follow after Buffett. I wish him all the best!

 

 

[Pellom]

It seemed to me like they want to be in position to buy Warren’s shares as the foundation disperses them. Any thoughts here?

[Maverick47]

5 hours ago, dealraker said:

The obsession with OR in the railroad business is quite the...well...obsession.  Freight volumes over the last ten years aren't much popular to discuss.

 

As is the norm, the expectation or sales pitch is for volumes to increase.  Meanwhile we have a merger and yet another few years of garbled financial presentations to come from paying up dearly and models of the past that struggled.

 

Owner of NSC since 1976; UNP and CSX for about 40 years; Burlington and Kansas City before bought; and CP and CNI for getting close to 20 years.

 

The hump yard I can see part of and hear from my lake home was "cut" only to re-open when service sucked.  Cutting your way to stardom is something the railroad industry should drop in the dust.

Helpful observations, @dealraker!
 

I would agree that things get dangerous when management is encouraged to focus primarily or even solely on a single measurable ratio to the exclusion of the myriad other ways that the quality and sustainability of a business can be measured.

 

As you note above, when obsessing over a railroad’s operating ratio, it’s too easy to value expense reduction above all else, even to the extent of harming future business prospects of the business one is presumably trying to maintain and “improve”.

 

Just as bad is when management is also responsible for estimating and reporting the value of either the numerator or denominator of a given ratio or metric. 
 

I think Munger had a comment at an Annual Meeting years ago when he mentioned something long the lines of being nervous about investing in any financial company that was “trying” too hard to produce “good” results….

[Whensthepaintdry?]

40 minutes ago, Pellom said:

It seemed to me like they want to be in position to buy Warren’s shares as the foundation disperses them. Any thoughts here?

I have always wondered if that was the plan.

[Maverick47]

42 minutes ago, Pellom said:

It seemed to me like they want to be in position to buy Warren’s shares as the foundation disperses them. Any thoughts here?

I hadn’t thought of that before, but now that you mention it, the company certainly should be in a financial position to do this.  Since the letter mentioned that the sale of Warren’s remaining holdings would likely be spread out over ten years after his death, it would only require repurchase of a few percent of the market cap per year for ten years to absorb such a stake. 

[bookie71]

Maybe he needs a new editor. Warren had that lady from Fortune, who kept his style constant.

[Eldad]

30 minutes ago, Maverick47 said:

Helpful observations, @dealraker!
 

I would agree that things get dangerous when management is encouraged to focus primarily or even solely on a single measurable ratio to the exclusion of the myriad other ways that the quality and sustainability of a business can be measured.

 

As you note above, when obsessing over a railroad’s operating ratio, it’s too easy to value expense reduction above all else, even to the extent of harming future business prospects of the business one is presumably trying to maintain and “improve”.

 

Just as bad is when management is also responsible for estimating and reporting the value of either the numerator or denominator of a given ratio or metric. 
 

I think Munger had a comment at an Annual Meeting years ago when he mentioned something long the lines of being nervous about investing in any financial company that was “trying” too hard to produce “good” results….

I disagree. I agree with Greg and Warren, BNSF is way behind and needs to get more efficient. UP has 40% operating margin and BNSF 34.5%. That’s a big difference. As Greg said 230 million in additional cash to BRK per ever 1% gain there. That’s over 1 Bil to BRK if they catch up to UP. WB realized he was wrong about this a few letters ago. Profit and cash is more important than volume, just like in insurance. 

[John Hjorth]

1 hour ago, Pellom said:

It seemed to me like they want to be in position to buy Warren’s shares as the foundation disperses them. Any thoughts here?

 

1 hour ago, Whensthepaintdry? said:

I have always wondered if that was the plan.

 

52 minutes ago, Maverick47 said:

I hadn’t thought of that before, but now that you mention it, the company certainly should be in a financial position to do this.  Since the letter mentioned that the sale of Warren’s remaining holdings would likely be spread out over ten years after his death, it would only require repurchase of a few percent of the market cap per year for ten years to absorb such a stake. 

@Pellom, @Whensthepaintdry? and @Maverick47,

 

It's by design. Mr. Buffett is, and has always been, con dynastic wealth.

 

Berkshire Hathaway Press Release [November 10^th 2025] : Thanksgiving Message from Warren Buffett

 

- - - o 0 o - - -

 

The last shirt doesen't have any pockets, no matter who you are.

Edited March 1 by John Hjorth

[longterminvestor]

15 hours ago, Gamecock-YT said:

If I was an employee that got that BS corporate letter he spends so much time talking about, I would have thrown it in the trash by the second paragraph. Do you think the person manufacturing homes for Clayton gives 2 licks about 'the shareholders', 'thinking in decades', or 'maintaining a fortress-like balance sheet' or do they care about getting a pay raise and more benefits? I guess Greg missed the principal-agent problem when they taught it at business school.  

 

 

Toto, I've a feeling we're not in Kansas anymore

Actually the folks on manufacturing line at Clayton DO CARE because the profitability of each home built is apart of their pay - its a bonus.  And this goes to exactly what Mr. Abel is talking about, CULTURE.  The culture of Clayton is such that employees are incentivized to NOT WASTE shareholder capital and do what they can to keep jobs under-budget.  Felt compelled enough to mention because this is not always the case at subs inside BRK however the decentralized model is supposed to take care of little things like this, Mr. Buffett has done what he can to incentive managers of the subs to create schemes that celebrate profitability (winning) and when subs are losing money - managers lose as well.  the comp plans for managers are fascinating at Berkshire.  

[dealraker]

2 hours ago, Maverick47 said:

Helpful observations, @dealraker!
 

I would agree that things get dangerous when management is encouraged to focus primarily or even solely on a single measurable ratio to the exclusion of the myriad other ways that the quality and sustainability of a business can be measured.

 

As you note above, when obsessing over a railroad’s operating ratio, it’s too easy to value expense reduction above all else, even to the extent of harming future business prospects of the business one is presumably trying to maintain and “improve”.

 

Just as bad is when management is also responsible for estimating and reporting the value of either the numerator or denominator of a given ratio or metric. 
 

I think Munger had a comment at an Annual Meeting years ago when he mentioned something long the lines of being nervous about investing in any financial company that was “trying” too hard to produce “good” results….

That's what I have felt about the railroads for years now, not as much Burlington but the others.  There is nothing "wrong" with being in an industry that has a period of any length where it is near difficult if not impossible to raise sales and overall company profits.  But when you start distorting all kinds of financial metrics and distorting reality trying to get your stock up...and options optional...that's when it gets pretty stupid.  It sells well, at times it sells off-the-charts well to naive one-variable obsessed investors.  But the business ain't doing crap but waffling around in the foul smelling dung management has likely created.  

 

My guess is that time will help the railroads, that there is some hope down the road.  But today...might be called fantasy built into the stock prices of UNP and CSX to say the least.

Edited March 1 by dealraker

[longterminvestor]

7 hours ago, John Hjorth said:

 

 

@Pellom, @Whensthepaintdry? and @Maverick47,

 

It's by design. Mr. Buffett is, and has always been, con dynastic wealth.

 

Berkshire Hathaway Press Release [November 10^th 2025] : Thanksgiving Message from Warren Buffett

 

- - - o 0 o - - -

 

The last shirt doesen't have any pockets, no matter who you are.

Mr. Buffett is intentionally converting the shares to B and gifting to foundations.  I have thought deeply about this and ultimately if a fund or individual accumulate enough of Mr. Buffett's A shares, that would be bad for Berkshire shareholders writ large - that kind of power in the wrong hands could be dangerous to the culture of Berkshire.

 

There are curious consequences I have considered when Mr. Buffett converts his A to B causing the amount of A shares outstanding to be reduced is control.  The A shares really should trade at a premium to B...but that wont happen because of the quick buck arbs can make.  The A Kind in size, real size, should trade at a premium...but the arb market will take care of anyone "trimming" their A's by buying the A and converting to B.  So basically after Mr. Buffett converts his A to B it will be VERY VERY hard to accumulate enough shares (A or B) to "control" Berkshire.  I have believed this was the intent for many years.  The size of Berkshire has also helped this problem.  

 

And I think this is what Mr. Buffett was trying to figure out once his wife passed.  From my reading, it seemed Mr. Buffett's attitude when Mrs. Buffett was alive, was pretty simple - accumulate a big pile and have Mrs. Buffett give it all away.  The "monetary value" of the shares after a point meant very little to Mr. Buffett after a point, his concern IMO its about the control of Berkshire that he cares mostly about. 

 

Mr. Buffett does keep score with money, as Mr. Munger has said "Warren, you are the most extreme lover of the big pile".  Mr. Buffett laughed and said "That's true".  

[Pellom]

18 hours ago, John Hjorth said:

 

 

@Pellom, @Whensthepaintdry? and @Maverick47,

 

It's by design. Mr. Buffett is, and has always been, con dynastic wealth.

 

Berkshire Hathaway Press Release [November 10^th 2025] : Thanksgiving Message from Warren Buffett

 

- - - o 0 o - - -

 

The last shirt doesen't have any pockets, no matter who you are.

 

Right, I know Warren's plan for the shares. What has been left unsaid is how Berkshire plans to respond to Buffett (and his kids) selling said shares over time.

 

It looks to me like Berkshire is going to buy them instead of allowing them to hit the open market.

 

“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.”

[backtothebeach]

10 minutes ago, Pellom said:

We may also purchase large blocks of shares directly from major holders when the opportunity presents itself.”

It's not really a new policy, Buffett has said before that if you have a large block for sale, give Marc Hamburg a call. They also bough a large block in 2012:
https://globalnews.ca/news/318546/warren-buffetts-firm-buys-9200-class-a-shares-from-longtime-shareholders-estate-for-1-2b/

[flesh]

2 hours ago, backtothebeach said:

It's not really a new policy, Buffett has said before that if you have a large block for sale, give Marc Hamburg a call. They also bough a large block in 2012:
https://globalnews.ca/news/318546/warren-buffetts-firm-buys-9200-class-a-shares-from-longtime-shareholders-estate-for-1-2b/

Anyone have a opinion informed or otherwise that large buybacks may be done at not perfect prices in the future is a large block is up for sale? 

Are the standards reduced a bit in these cases?

[adesigar]

On 2/28/2026 at 8:55 PM, Gamecock-YT said:

If I was an employee that got that BS corporate letter he spends so much time talking about, I would have thrown it in the trash by the second paragraph. Do you think the person manufacturing homes for Clayton gives 2 licks about 'the shareholders', 'thinking in decades', or 'maintaining a fortress-like balance sheet' or do they care about getting a pay raise and more benefits? I guess Greg missed the principal-agent problem when they taught it at business school.  

 

 

Toto, I've a feeling we're not in Kansas anymore

What a dumb comment. It’s a letter to SHAREHOLDERS not employees. 

[Jaygo]

16 minutes ago, adesigar said:

What a dumb comment. It’s a letter to SHAREHOLDERS not employees. 

 

The letter to SHAREHOLDERS references a letter he sent to EMPLOYEES and that is what gamecock was talking about. Its a letter to employees sited within the letter to shareholders and depending on what employees received it i'm sure the letter landed between uninterested and  mildly annoyed. 

Edited March 2 by Jaygo

[scorpioncapital]

On 2/28/2026 at 3:41 PM, Munger_Disciple said:

 

I agree that sentence makes no sense whatsoever. He should have just said the Board always makes decisions with the best long-term interests of shareholders in mind; i.e., they act like owners. 

Hopefully it's just a rookie error. 

 

 

The stock has underperformed SP500 for 10 years. Abel says no dividend either. 

Is the Board doing things in the best interests?

Is Abel really Able?

 

All questions we don't know the answers to. Buffett didn't do very well the last decade either although the under performance was not huge it was somewhat significant.

 

Does Brk have a purpose or mission? Should it be disbanded? Just sitting on a pile of cash is great if you are a truly great investor but if you're aiming for average, does it make sense not to allow individual investors to choose how to invest ? My concern is that Brk has a good CEO now but does it have a good Investor? Without that, things may crawl forward but we don't know if they can outperform or even match the SP500.

 

 

Edited March 2 by scorpioncapital

[Pellom]

I thought it was interesting too that he put a percentage on Ted's piece of the portfolio. Maybe Warren has done that in the past and I don't remember it -- it's another one of those things that doesn't necessarily change anything but is putting a name on something that was once anonymous. 

[Intelligent_Investor]

Honestly, I think over the next decade or two the largest driver of returns at Berkshire will be how many shares they can repurchase. Don't see much room for market beating returns just from the existing businesses or the investments if they are intent on holding large amounts of cash

[Munger_Disciple]

14 minutes ago, Pellom said:

I thought it was interesting too that he put a percentage on Ted's piece of the portfolio. Maybe Warren has done that in the past and I don't remember it -- it's another one of those things that doesn't necessarily change anything but is putting a name on something that was once anonymous. 

 

Warren had done that in the past so it's nothing new. Overall the theme of the letter, it seems to me, is continuity. 

Edited March 2 by Munger_Disciple

[backtothebeach]

Could be nothing, but maybe Buffett wanted veto power on buybacks?

--

Last year's 10K:
Berkshire’s common stock repurchase program permits Berkshire to repurchase its Class A and Class B shares at any time that Warren Buffett, Berkshire’s Chairman of the Board and Chief Executive Officer, believes that the repurchase price is below Berkshire’s intrinsic value, conservatively determined.

This year's 10K:
In 2025, Berkshire’s common stock repurchase program was amended to permit Berkshire to repurchase its Class A and Class B common stock at any time that Berkshire’s Chief Executive Officer, after consultation with the Chairman of the Board, believes that the repurchase price is below Berkshire’s intrinsic value, conservatively determined.

[sleepydragon]

6 minutes ago, backtothebeach said:

Could be nothing, but maybe Buffett wanted veto power on buybacks?

--

Last year's 10K:
Berkshire’s common stock repurchase program permits Berkshire to repurchase its Class A and Class B shares at any time that Warren Buffett, Berkshire’s Chairman of the Board and Chief Executive Officer, believes that the repurchase price is below Berkshire’s intrinsic value, conservatively determined.

This year's 10K:
In 2025, Berkshire’s common stock repurchase program was amended to permit Berkshire to repurchase its Class A and Class B common stock at any time that Berkshire’s Chief Executive Officer, after consultation with the Chairman of the Board, believes that the repurchase price is below Berkshire’s intrinsic value, conservatively determined.

Interesting. So greg maybe thinking about buyback and he asked warren?

[Eldad]

1 hour ago, scorpioncapital said:

 

The stock has underperformed SP500 for 10 years. Abel says no dividend either. 

Is the Board doing things in the best interests?

Is Abel really Able?

 

All questions we don't know the answers to. Buffett didn't do very well the last decade either although the under performance was not huge it was somewhat significant.

 

Does Brk have a purpose or mission? Should it be disbanded? Just sitting on a pile of cash is great if you are a truly great investor but if you're aiming for average, does it make sense not to allow individual investors to choose how to invest ? My concern is that Brk has a good CEO now but does it have a good Investor? Without that, things may crawl forward but we don't know if they can outperform or even match the SP500.

 

 

Lots of talk in years past about how holding a far smaller amount of cash for too long would be a breach of fiduciary duty. 
 

Now with a 1T market cap if it rains gold and they actually deploy 350 billion, you are probably looking at an antitrust breakup in the not too distant future. Bernie already listed them on his mandatory breakup list. I have a feeling someone like Bernie will be in charge next. Especially if we get a big recession and the market collapse BRK seems to be pinning all of its hopes on at this point. It’s my largest position but I too wonder about what the plan is and what the purpose of the company is at this point. It seems like it is a widow and orphan blue chip, in which case it probably needs a dividend. 

[charlieruane]

I think the setup/plan is pretty simple: 

 

-Grow what we own as best we can

-Bolt-ons

-When recession hits, try to make 1-3 giant investments

-Hit the buybacks hard when they make sense

 

That's really all they have to do... and over the next 10 years, Berkshire will probably get to do all of these activities. It's not crazy to hold off on dividends. 

 

Edited March 2 by charlieruane