"New King Ascends" 100 Days, Berkshire Begins to Change

Greg Abel has taken over Berkshire Hathaway for a hundred days. The new CEO is reshaping the world's most watched investment group with a more proactive management style while continuing the company's core culture. On April 17, The Wall Street Journal published an in-depth report focusing on the various changes since Greg Abel took office as CEO of Berkshire Hathaway a hundred days ago. Since taking office in January this year, Abel has begun adjusting the stock investment portfolio, restarting the stock buyback plan, increasing the layout in the Japanese market, and promoting his long-time deputy. Compared to his predecessor Warren Buffett, Abel's examination of the company's businesses and stock holdings is more proactive and critical. He is expected to take a tougher stance on underperforming subsidiaries, stock holdings, and even executives. In an interview, Abel spoke about Buffett and the late partner Charlie Munger: We have some differences, mainly in style and obviously in the way we handle issues, but our fundamental values have always been the foundation of building the company. For investors, the moment to test Abel's true strength may not have arrived yet. Berkshire currently holds a record $373.1 billion in cash, and how decisively he acts before the next deep recession will be the ultimate test for this new leader. Management Style: From "Passive Delegation" to "Active Involvement" Abel officially took over as CEO in January this year, but the actual power transition began as early as May last year. At that time, the 95-year-old Buffett announced at the Berkshire annual meeting that he would retire by the end of the year. Abel said: That was the real beginning of the transition. Buffett has publicly stated that even if some management did not meet standards, he preferred to avoid direct confrontation and chose to retain them. Abel, however, is quite different. According to reports citing familiar sources, he is not hesitant to take necessary actions to improve the business, including firing executives when necessary. Lawrence Cunningham, author of the Berkshire series of books, revealed that about a year ago he asked Abel whether he would continue Buffett and Munger's practice of giving underperforming subsidiaries a pass. Abel's response was: I will not do that. I believe in autonomy, I believe in decentralization. But if there are underperformers, I will call them out directly. Vicki Hollub, CEO of Occidental Petroleum, has a direct experience of this. Berkshire holds significant shares in Occidental Petroleum, and she commented that Abel "likes to get involved, is more hands-on, and dives into the details of the business," while also describing him as "a tough negotiator, but honest and fair." Buffett himself has sent signals to both internal and external parties: Abel is now the real decision-maker. When business people write to Buffett seeking transaction opportunities, he may respond, but he will also forward the original letter and his reply to Abel Zero Tolerance for "Underperformers" in Subsidiaries In managing wholly-owned subsidiaries, Abel has also shown a different attitude compared to Buffett. Historically, Berkshire rarely sells its wholly-owned subsidiaries, with only two precedents: the sale of its newspaper business in 2020 and the closure of its textile business in 1985. However, if a subsidiary fails to meet expectations, selling is not out of the question. In core business lines, Abel continues to invest significant time visiting subsidiary management, particularly BNSF Railway and Berkshire Hathaway Energy, the latter being a business where Abel previously served as CEO for many years. He has also spent the past year deeply learning about Berkshire's insurance business and maintaining close communication with key figure Ajit Jain. Jain is expected to continue overseeing the insurance business, and the company has already developed a succession plan for him. On a day-to-day operational level, Abel drives two hours from his home in Des Moines, Iowa, to Omaha several days a week for work, while frequently using Berkshire-owned NetJets' private jets to travel around the country for in-person visits with subsidiary management. Reports indicate that he has no plans to relocate to Omaha and will remain in Iowa at least until his child graduates from high school. Abel stated: If I look back on my first hundred days, it’s that the focus on operational excellence has never waned. Clarifying "Core" and "Non-Core" Holdings in the Portfolio In terms of investment strategy, Abel is restructuring and clarifying the stock portfolio accumulated during Buffett's era. Wall Street Journal mentioned that in his first annual letter to shareholders on February 28 this year, Abel explicitly listed Apple, American Express, Coca-Cola, and Moody's as "core" holdings. These four stocks collectively account for more than half of Berkshire's investment portfolio, and their cost basis is extremely low. Bank of America and Chevron did not appear on the core holdings list. Data shows that over the past 18 months, Berkshire has reduced its stake in Bank of America by about half to 517 million shares, while the market value of its Chevron holdings is approximately $20 billion. Abel mentioned in the letter that Berkshire holds "meaningful positions" in "a few other companies," and the capital allocation for these positions will be "more dynamic," with the potential to elevate them to core holdings in the future. In terms of personnel arrangements, Abel has liquidated the stocks managed by Todd Combs. Combs recently left to join JP Morgan and was one of the two investment managers previously recruited by Buffett. Reports citing informed sources indicate that Abel is unlikely to recruit another candidate to assist in managing the portfolio, as he will personally lead stock investment decisions. In the annual letter, Abel reiterated that Berkshire will continue its "concentrated holding" investment style, while also restarting the stock buyback plan that had been stagnant since 2024, and further deepening Berkshire's presence in the Japanese market by acquiring shares in a Japanese insurance company. Cash Deployment: The Ultimate Test of $373.1 Billion For many Berkshire shareholders, Abel's true test lies in Berkshire's unprecedented cash reserves. As of now, Berkshire holds a record cash reserve of $373.1 billion. Whether he can decisively convert this fund into significant acquisitions during an economic downturn will be the core standard by which the market ultimately judges Abel. Chris Bloomstran, Chief Investment Officer of Semper Augustus Investments, which has long held Berkshire stock, candidly stated: "I can't judge how outstanding he is until we experience the next deep recession. Shareholders' expectation of Greg should be: you must be willing to put $300 billion into action. The expectation from the outside is that he will do so, and be more proactive than Warren in his later years." This statement, to some extent, also reflects the collective mindset of Berkshire's shareholder group: there is trust in Abel, but this trust needs time and results to be fulfilled. Risk Warning and Disclaimer The market has risks, and investment should be cautious. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investing based on this is at one's own risk