The $358 billion question for the new CEO of Berkshire Hathaway

As Warren Buffett’s handpicked successor, Abel faces several challenges as he takes the reins today. For one, he isn’t Warren Buffett, who became a household name as the leader of one of America’s most-admired companies. Shareholders don’t know if Abel can channel the stock-picking magic of his predecessor, who earned the nickname the Oracle of Omaha.

The most pressing issue is how to deploy Berkshire’s record cash pile. The company has been a net seller of stocks for 12 straight quarters. Close observers view that as a sign that prices had gotten too high for Buffett to believe an investment would lead to worthwhile long-term returns.

The S&P 500 index’s 16% jump in 2025 has left many corners of the market looking pricey for a bargain hunter like Berkshire. The company, which has historically done big share buybacks, also refrained from repurchasing its own shares for five consecutive quarters.

The resulting buildup of cash is a problem—though perhaps a good one, as far as problems go—that leaves Abel with both a menu of options and scrutiny from shareholders.

Abel long ago earned Buffett’s trust. As vice chairman, the 63-year-old has led all of the companies that Berkshire owns outside of the insurance sector since 2018.

“Greg has exceeded my expectations in every respect—and I hope he gets a 20-year run or more," Buffett, 95, said in a recent statement to The Wall Street Journal.

Abel declined to comment for this article. At the 2025 annual meeting in May, he said the cash pile is an “enormous asset" that gives Berkshire a cushion if a market downturn occurs.

The company’s every move is closely followed. Over 60 years, Buffett built Berkshire into not only one of the most legendary U.S. companies, but one of the largest. Berkshire’s market value topped $1 trillion in 2024, one of only two non-tech companies in the U.S. to reach that milestone.

Once primarily Buffett’s vehicle for investments, the sprawling conglomerate now employs around 400,000 people across a range of businesses, including BNSF Railway, Dairy Queen, Duracell, Fruit of the Loom and Geico. It owns so many businesses in so many sectors that it’s sometimes seen as a proxy for the U.S. economy.

“Greg will make his mark on Berkshire," said Chris Bloomstran, president of Semper Augustus Investments Group, which has owned Berkshire shares for about 25 years. “It’s going to be fun to see what he does."

Abel was born in the Canadian Prairies. Boyhood hustles included delivering advertising fliers to homes, redeeming bottles for money and filling fire extinguishers. He grew up playing hockey and is an assistant coach on his son’s hockey team. Abel has credited team sports for shaping his leadership skills.

“If I had to be remembered as something right now, obviously I’d want to be remembered as a great father, but equally, a coach," Abel said at the annual meeting.

Mark Oman, a former Wells Fargo executive and longtime friend of Abel, says that Abel and his wife, Andrea Abel, host gatherings at their home in Des Moines, Iowa, for the children who play on their son’s hockey team and their parents.

Oman recalls watching Olympic curling on TV with Abel and joking about getting a curling team together. Abel’s ultracompetitive instincts came out: “Oh, I think I could probably coach you to be the best in Iowa," he quipped. “That’s kind of a low bar," Oman remembers thinking.

Abel joined Berkshire more than two decades ago when Berkshire bought a 75% stake in Des Moines-based MidAmerican Energy, where he was president.

After the acquisition, he expanded the company, renamed Berkshire Hathaway Energy, into one of the biggest providers of power in the central and western U.S., in part through acquisitions and investments. In 2018, he was put in charge of all of Berkshire’s noninsurance businesses, ranging from candy to footwear to building materials.

“I think he’s been trained well, and he knows it well, and he’s a smart guy," said Mario Gabelli, a money manager whose firm has owned shares of Berkshire since the 1980s. He got to know Abel better through their shared involvement in the nonprofit Horatio Alger Association of Distinguished Americans.

Abel is stepping into the spotlight at an age many Americans are considering retirement. He is the latest successor tasked with following in the footsteps of a lionized leader: Tim Cook took over Apple in 2011, the year Steve Jobs died, and Jeff Bezos handed over the reins at Amazon to Andy Jassy in 2021.

At Berkshire, it’s a handoff years in the making. Abel’s name has long popped up in Buffett’s annual letters to shareholders, considered essential reading among stock pickers—even those who don’t own Berkshire shares. Charlie Munger, Buffett’s longtime business partner, let the succession plan slip at the 2021 annual meeting. As CEO-in-waiting, Abel joined Buffett on stage at Berkshire’s arena-filled annual meetings.

“We will remain Berkshire," Abel said at the 2025 meeting. “How Warren and the team have allocated capital for the past 60 years, it will not change."

Buffett has long prided himself on maintaining a strong balance sheet with plenty saved up for a rainy day. During the financial crisis, he famously used Berkshire’s financial strength to throw lifelines to companies including Goldman Sachs and General Electric. He has been waiting for other big opportunities. At the 2017 annual meeting, Buffett said: “There’s no way I can come back here three years from now and tell you that we hold $150 billion or so in cash or more, and we think we’re doing something brilliant by doing it." The cash pile kept growing.

Berkshire’s cash and equivalents increased to $358 billion by the end of September, after accounting for a payable for purchasing some short-term government debt.

The risk to holding so much cash is that the return Berkshire can receive on such holdings could fall as the Federal Reserve lowers interest rates, some analysts have warned. On the other hand, they say, the cash is a protective armor for Berkshire’s balance sheet.

Buffett had said that he and his deputies were searching for stocks cheap enough to invest in. Some investors say they don’t expect Abel to make any big investments until a large market decline or recession brings stocks down from historically expensive levels.

Companies in the S&P 500 are trading at more than 5 times the value of their net assets, above their 10-year average of 3.9 times. Berkshire’s Class B shares recently traded at a price-to-book ratio of 1.6, according to FactSet.

Others have speculated Berkshire could use its cash to pay a dividend, something Buffett has resisted, partly because of the tax consequences for shareholders. The company has only done so on one occasion, a dividend of 10 cents a share in 1967.

Little is known about Abel’s own investing record. He has said that he shares Buffett’s investing creed, including prioritizing a fortresslike balance sheet.

For years, Todd Combs, Geico’s former chief executive, and Ted Weschler, Berkshire’s investment manager, were expected to take over stock-picking duties once Buffett stepped down. But, in December, Berkshire announced that Combs had resigned to lead a $10 billion strategic-investment group at JPMorgan Chase.

One clue for what could happen: Buffett said at Berkshire’s 2024 shareholder meeting that he believes Abel should handle capital allocation decisions on his own. “He understands businesses extremely well," Buffett said. “If you understand businesses, you understand common stocks."

Berkshire’s Class B shares have slid about 7% since Buffett said he is retiring, which some attribute to the loss of a “Buffett premium," or the higher price investors were willing to pay to own Berkshire’s stock because of his presence. Berkshire has a particularly large number of individual investors, and they come from all over the world.

Berkshire already said Abel will take over from Buffett to write the company’s annual letters to shareholders. And in May, when Berkshire investors gather in Omaha, Neb., for its annual meeting, Abel will take the stage to answer questions, while Buffett, who will remain chairman, sits nearby with the other board members.

Berkshire shareholders say that they don’t expect Abel to try to be the next Buffett. More important, they say, he doesn’t have to be.

That is largely by Buffett’s design. Buffett is a famously hands-off manager, building Berkshire as a decentralized company with just a handful of top executives and largely autonomous subsidiaries. Buffett has said he purposely purchases companies that are so self-sufficient that they can thrive regardless of who is at Berkshire’s helm.

Abel is taking over a different Berkshire than Buffett did. Berkshire’s current size means that the company must be even more prudent when making investment decisions than it has been in the past, Buffett has said. Berkshire is also big enough that its future growth will be slow, he has said.

“It’s all an evolution, right? Buffett and Munger took the company to this point. It may, in fact, be right that a different kind of person could take it further," said Bill Stone, chief investment officer at Glenview Trust, a longtime Berkshire shareholder.

Abel has largely kept a low profile and stayed out of the spotlight, unlike Buffett who lent his image to ads for brands such as Geico and made cameos in “The Office" and soap opera “All My Children." Shareholders say they don’t see Abel penning op-eds or making appearances on TV shows.

Nor do they expect him to act as Wall Street’s authoritative voice of calm. “I don’t think the market is turning to Greg for advice in the midst of a 40% market downturn," said Darren Pollock, portfolio manager at Cheviot Value Management and a Berkshire shareholder.

That doesn’t mean Abel won’t be a good steward for Berkshire shareholders, he added. Plus, Buffett will still be nearby in the Omaha office.

Write to Krystal Hur at krystal.hur@wsj.com