Ready and Abel 🧬

If investing had a Hall of Fame, with marble busts and milling crowds of tourists, Warren Buffett would probably have his own wing. He’s one of the most successful investors of the last century, his name spoken in the same breath as Graham, Lynch, Soros, Bogle, and Templeton.

No wonder Buffett’s decision to step back from the day-to-day at Berkshire Hathaway is making such a splash. On 1 January 2026, Greg Abel became chief executive. Buffett, who ran the firm for more than half-a-century, is staying on as chairman. Berkshire has signalled the move for several years, and in late 2025 rewired its bylaws to formalise a split between the CEO and chairman roles. Even so, it feels like a significant passing-of-the-torch moment. Can Abel inherit the temperament as well as the title?

Business man

The Buffett temperament was honed over decades, learning from the founder of “value investing,” Benjamin Graham. Studying under Graham at Columbia Business School, Buffett learned to identify a business that is cheap, to buy it, and to have the patience to let the market figure out the gap. Buffett also has a very specific advantage: his obsessive curiosity about business itself. In 1951, Buffett travelled to Washington on a Saturday to learn about insurance company GEICO, but found the office closed. The anecdote reveals how Buffett wanted to understand the business as a business, not just as a stock.

That's the man, now the business. Berkshire is often described as a conglomerate. It’s more an investment vehicle dressed as a cash-generating insurance balance sheet. Plus a portfolio of large public equities, plus a collection of operating businesses that largely run themselves. The resulting run, from 1965 to today, has been nothing short of impressive. 

Berkshire Hathaway did not spring into existence as a fully-formed financial juggernaut, of course. The firm’s modest genesis was in textiles. Berkshire Fine Spinning Associates and Hathaway Manufacturing merged in 1955 to form Berkshire Hathaway. Buffett started buying shares in Berkshire in December 1962 – $7.50 a share – and took control in 1965. 

The move that turned the company into a compounding machine was Berkshire’s shift into insurance, starting with National Indemnity and later supercharged by GEICO. Insurance companies collect premiums today and pay claims later (if a claim arises). The gap creates float which can be invested. This is the engine of the investment vehicle. Berkshire defines its insurance float as the net liabilities assumed under insurance contracts. In its 2024 results release it reported a float of about $176 billion as of Q3’25.

For an insurer, the float is only valuable if the underwriting is sound. Cheap capital becomes expensive capital if you routinely underprice risk and don’t charge enough for the insurance contracts you’re selling. But when underwriting is disciplined, float can power growth. Over decades, that becomes a distinct advantage. Berkshire can hold cash when markets look unattractive. And act quickly when they don’t. Buffett was never tied to an investment mandate in the same way a fund manager might be.

Stitched together

Berkshire is three things. Insurance operations that generate float and, at times, underwriting profits; operating businesses (rail, energy, manufacturing, retail) that generate cash and are mostly run in a decentralised way; and a portfolio of investments funded by (1) and (2). This structure is the secret sauce of Berkshire. Throw in Buffett’s Zen-like patience and Berkshire can do nothing for long stretches, framing it in a way shareholders accept. At least when Buffett was explainer-in-chief.

There are a number of historical milestones. In 1972, Berkshire bought See’s Candies for $25 million. It’s considered a turning point because it nudged Berkshire toward paying for quality and pricing power rather than cheap assets following the value-above-all-else approach of his mentor, Graham. In 1996, Berkshire acquired the remaining 49% of GEICO it didn’t already own for about $2.3 billion.

Berkshire’s capital-return policy is one of its signature contrarian policies. In his 2024 letter, Buffett wrote that Berkshire shareholders received only one cash dividend during the 1965–2024 period: a 10-cent payment on 3 January 1967, a total of $101,755. Berkshire has long treated reinvestment and compounding as the default.

The CEO will be paid like a CEO

Before he became CEO, Greg Abel oversaw Berkshire’s non-insurance businesses, a position he’d held for years. But his background at Berkshire is in the energy business. 

Berkshire signalled the beginning of the Abel era through a board decision on pay, reportedly raising Abel’s salary to $25 million in 2026. That’s a lot more than the $100,000 salary Buffett accepted for decades. Abel reportedly holds about $171 million of Berkshire stock and he sold his 1% stake in Berkshire Hathaway Energy, worth about $870 million in 2022. 

The governance plumbing has been laid out too. Berkshire’s board amended bylaws in September 2025 with the purpose of separating the chairman and CEO roles. It explicitly links that change to Abel’s appointment as President and CEO, with Buffett remaining chairman.

Running the subsidiaries is a management job. Running Berkshire is a capital allocation job. Many shareholders weren’t just buying Berkshire’s businesses. They were buying Buffett’s judgement. Can Abel allocate incremental capital in a way that keeps Berkshire’s compounding engine humming, especially at Berkshire’s scale? 

Given Berkshire’s record cash position, not to mention operating cash flow from its wholly-owned businesses, you get a good problem to have: what decent firms are left to buy at attractive prices? Berkshire’s size means it can’t easily dish out the dollars without risking price distortion. Buffett’s temperament meant he could sit on cash for long periods. Abel may not have the same advantage with shareholders, at least initially. 

People buy people

As well as piles of cash, Berkshire has people. Ajit Jain, for example, is crucial to Berkshire’s insurance operations, the part of the company that generates the float that enables so much else. Succession is often not one handover but a chain of handovers and, as we know, the insurance link is disproportionately important.

Berkshire’s subsidiaries are run by managers with significant autonomy while headquarters stays unusually lean for a company of this size. Post-founder, the risk is often not down to a single bad decision but instead more process, more layers, more committees, more integration. Eventually, less of the autonomy that attracted great operators in the first place.

Buffett spent decades educating his shareholders. His annual letters are part report, part investor philosophy. They helped build a shareholder base that tolerated the idea Berkshire would not pay dividends and would not chase fashion. Buffett has expressed confidence Abel will continue the frank annual updates to investors. Buffett himself intends to “continue talking to you and my children about Berkshire via my annual Thanksgiving message”.

Set up for succession

Buffett and Berkshire have engaged in a decades-long succession process to ensure continuity of the business model and values. So, does Berkshire maintain underwriting discipline, protect the float that fuels everything else? Do buybacks and acquisitions look opportunistic and price-sensitive. Or do they look like a new CEO ‘doing something’? We probably won’t know until Abel’s first annual letter. Until then, even a big new position like Alphabet invites the question, whose call was it – Buffett’s or Abel’s? And does Berkshire keep the unusually plainspoken tone Buffett cultivated? All will be at the forefront of Abel’s mind as he leans into his new role as CEO of Berkshire Hathaway.

The good news is that much of Berkshire’s winning model is the infrastructure and culture cultivated over decades. The bad news may be that Buffett’s reputation was itself a corporate asset. For decades, Berkshire’s edge was Buffett’s temperament: the ability to do nothing, loudly and confidently. Now, Abel has to show Berkshire can do all that without the Oracle of Omaha as CEO. No pressure.