Warren Buffett stepped down as CEO of Berkshire Hathaway on January 1 of this year. His handpicked successor, Greg Abel, took over a conglomerate worth more than a trillion dollars, with an insurance empire, a railroad, dozens of operating businesses, and the largest corporate cash pile in American history. $373 billion in cash. More than the GDP of most countries.
The whole world wondered what Abel would do with it. For more than 40 years, Buffett had set the playbook. Buy great businesses at fair prices, hold forever, and never be afraid to sit on cash when nothing looks cheap. In his final 19 months as CEO, Buffett didn’t authorize a single buyback. He just kept stacking cash.
Then Abel took over. And within three months, he made a series of moves that tell you exactly how the next chapter of Berkshire is going to be written.
The Move Buffett Wouldn’t Make
On March 4, Abel restarted Berkshire’s share repurchase program. First buyback in 21 months. The company bought back the equivalent of 309 Class A shares, worth about $226 million. Then Abel bought roughly $15 million of Berkshire stock with his own money and told shareholders he’d commit his entire after-tax salary every year going forward to buying more.
That last part matters. It’s not a grand gesture. It’s a statement. When a CEO says “I’m going to take every dollar the company pays me and put it back into the stock,” he’s telling you he believes the stock is worth more than the market is paying. For two years under Buffett, no buybacks. Within two months of Abel, buybacks plus personal buying. That’s a signal.
Berkshire shares closed Monday at $468.50. Morningstar pegs fair value at $392, which puts the stock at roughly a 20% premium. So Abel and Buffett apparently see something Morningstar doesn’t. Or they believe the operating businesses will grow into the price faster than the market expects. Either way, when the people closest to the company are buying, I pay attention.
Breaking the Cash Hoarding Pattern
Abel hasn’t just been buying back Berkshire stock. He’s putting the cash pile to work in other ways too.
On January 2, Berkshire closed a $9.7 billion all-cash acquisition of OxyChem from Occidental Petroleum. That’s a real operating business. Chlorine, caustic soda, vinyls, the boring chemical stuff that every industrial supply chain in America needs. Steady cash flow. No drama. Classic Berkshire.
Then in March, Berkshire committed another $1.8 billion to buy a 2.49% stake in Tokio Marine Holdings, Japan’s largest insurer, as part of a new strategic partnership. Buffett had already been building Japanese exposure for years, most famously through the five big trading houses. Abel is extending that playbook into insurance, which is Berkshire’s home turf.
Two moves. $11.5 billion deployed. A hint at what Abel is actually doing. The Japanese deal also tells you Abel is willing to keep looking overseas when U.S. stocks feel expensive. That’s important, because the S&P 500 closed at a record 7,100 last week.
What This Tells Me About Abel
I’ve been watching Buffett my whole investing life. He had a few clear preferences. Wonderful businesses at fair prices. Insurance as the engine. A willingness to sit on cash forever if nothing looked attractive. He was famously patient. Sometimes too patient, honestly. He missed Amazon. He was late to Apple. He never really touched Google.
Abel is different. He spent his career running Berkshire’s non-insurance operations, not picking stocks. He thinks like an operator. Operators don’t love sitting on $373 billion of cash earning 4%. They want to put it to work in businesses they can run, improve, and grow.
My read is this. Abel isn’t trying to be Buffett. He’s trying to be a good steward of the culture Buffett built while being more willing to deploy capital when it makes sense. Buybacks when the stock is cheap enough to warrant them. Bolt-on acquisitions like OxyChem. International partnerships like Tokio Marine. A more active approach, but the same underlying philosophy. Value, cash flow, durable competitive advantages.
How I’m Thinking About Berkshire Right Now
Let me be straight with you. I’m not here to make a specific buy recommendation on Berkshire today. At $468, it’s not obviously cheap. Morningstar has it as slightly overvalued. That matters.
But here’s what does matter for every long-term investor. Berkshire is one of the few stocks you can hold for 20 years and not have to worry about. The insurance float generates cash. The operating businesses are diversified across the real economy. Management is aligned with shareholders. The new CEO has just told you, with real dollars, that he thinks the stock is worth buying. And he’s got $360 billion or so left in cash to deploy when better opportunities come up.
If you already own Berkshire, the Abel transition isn’t something to worry about. The foundation is solid. If you don’t own it, put it on your watchlist and wait for a broader market pullback. A 10% or 15% correction would likely bring the stock down to a price where the math works better.
And if you want to study how a disciplined capital allocator operates in real time, follow Abel’s moves over the next year or two. He’s showing you his playbook one decision at a time. That’s a free education you won’t get anywhere else.
— Tom
