Berkshire analysts were tepid after annual meeting. What Abel can do to win them over
Wall Street analysts came away from Greg Abel’s first annual meeting at Berkshire Hathaway broadly impressed with his command of the business, but underwhelmed by the company’s restrained pace of share buybacks. Despite Berkshire’s cash pile nearing $400 billion and a return to buybacks in early March, first-quarter repurchases totaled just $235 million, a figure that several analysts said fell short of expectations given perceived discount between the stock price and Berkshire’s intrinsic value. “We think investors were hoping for a more aggressive buyback stance,” Catherine Seifert, analyst at CFRA, said in a note. She maintained her hold rating on Berkshire. While Abel reiterated Berkshire’s policy of repurchasing shares when they trade below intrinsic value, he stopped short of committing to a defined level of capital deployment. March resumption Berkshire resumed buybacks in March for the first time since 2024. The owner of Geico insurance and Dairy Queen, among dozens of assets, had already disclosed that it purchased $226 million in stock on March 4, so this means it only bought a tiny amount more as the quarter came to a close. That was “modestly disappointing,” said KBW analyst Meyer Shields, who nonetheless praised Abel for “a very strong job” communicating a detailed understanding of Berkshire’s diverse operations. Shields pointed to a candid discussion of margin pressures at BNSF Railway and management’s strategy at the shipping line as enhancing Abel’s credibility. “We think CEO Greg Abel did a very strong job of communicating a detailed understanding of the nuances of many of the wide array of businesses, including near-term challenges — we viewed the updates on Burlington Northern Santa Fe’s below-peer margins and its past and planned responses as impressively candid and hence credible — and longer-term opportunities,” Shields, who has an underperform rating on Berkshire, wrote in a note. UBS analyst Brian Meredith reiterated a buy rating and said the meeting reinforced a continuity in Berkshire’s culture and capital allocation after the legendary Warren Buffett stepped down as CEO, while highlighting opportunities to improve operating performance. He pointed to technological initiatives, including AI adoption at BNSF and other units, as a potential driver of returns. “Greg Abel performed well in his first Annual Meeting as CEO, in our view, exhibiting a deep understanding of all of BRK’s major businesses and plans to drive operational excellence,” Meredith said. Artificial intelligence emerged as a central theme at the meeting. Abel said Berkshire is already exploring AI-driven tools to improve operations at BNSF, and spoke fluently about technologies like large language models, emphasizing their potential to enhance the company’s existing businesses. He also pointed to the surge in data center development as a major tailwind for Berkshire’s utility operations, with rising power demand creating a significant growth opportunity for its energy grid assets. “Our sense at this juncture is that Abel is much more comfortable discussing the manufacturing/energy/utility parts of the firm, and less so, the insurance businesses. He did, however, opine about cyber risk and made a case for a limited use of AI, emphasizing the need for human judgment,” Seifert at CFRA said.
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