TLDR
- In his inaugural shareholder letter, Greg Abel designated Apple (AAPL), American Express (AXP), Coca-Cola (KO), and Moody’s (MCO) as permanent portfolio positions
- The new CEO committed to continuing Warren Buffett’s value investment philosophy and maintaining a robust financial foundation
- Fourth-quarter operating profits declined 29% compared to the previous year, reaching $10.2 billion, affected by insurance sector challenges
- Bank of America (BAC) and Chevron (CVX) were conspicuously excluded from the permanent holdings designation
- Warren Buffett continues as chairman, maintaining a full-time presence as an advisor
In his debut communication to shareholders, Greg Abel has outlined Berkshire Hathaway’s investment priorities as CEO, designating four equity positions as long-term core holdings while disclosing a significant quarterly profit decline.
Abel assumed leadership from Warren Buffett in early 2026, following Buffett’s May 2025 retirement announcement. The legendary investor continues serving as chairman with a consistent five-day weekly office schedule.
The shareholder communication pinpointed four primary equity investments that Berkshire intends to maintain with “limited activity.” The quartet comprises Apple, American Express, Coca-Cola, and Moody’s.
Abel characterized these companies as enterprises Berkshire “understands well,” featuring exceptional management teams and promising long-range prospects. He indicated the conglomerate would only “significantly adjust” these positions if fundamental business outlooks deteriorated.
These four equity stakes, combined with investments in five Japanese trading houses, represent approximately two-thirds of Berkshire’s stock portfolio. The aggregate valuation of these nine positions exceeds $200 billion.
Notable Exclusions from Core Holdings
Two major positions within Berkshire’s top five were omitted from Abel’s core designation: Bank of America and Chevron. The conglomerate has substantially reduced its Bank of America holdings by approximately half during the last year and a half, bringing the position down to roughly 517 million shares valued near $28 billion.
The Chevron stake, currently valued around $20 billion, similarly didn’t make Abel’s permanent holdings list. This exclusion has sparked considerable discussion among Berkshire analysts.
Berkshire’s Apple investment has appreciated dramatically beyond its initial purchase price. The position was acquired at an average cost of approximately $27 per share, contrasting with today’s price near $264. While Buffett previously reduced the Apple stake by roughly 80% from its zenith, Abel’s communication indicates no additional reductions are contemplated.
Fourth Quarter Results Disappoint
Berkshire disclosed fourth-quarter operating profits of $10.2 billion, representing a decline exceeding 29% from the prior year’s $14.56 billion. The downturn stemmed partially from diminished insurance operations performance.
For fiscal 2025, Berkshire generated operating earnings totaling $44.5 billion, trailing 2024’s $47.4 billion but surpassing the five-year average of $37.5 billion.
Berkshire’s cash reserves and Treasury securities totaled $373.3 billion at the conclusion of Q4, showing a modest decrease from the previous quarter’s $382 billion. Abel referenced this liquidity as “dry powder” positioned for deployment when attractive opportunities emerge.
Uncertainty persists regarding day-to-day equity portfolio management responsibilities. Abel lacks portfolio management experience. Investment manager Ted Weschler will oversee approximately 6% of investments, maintaining his pre-retirement allocation.
Abel stated that “responsibility ultimately rests with me as CEO” regarding capital allocation choices, with Buffett available for consultation.
