Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) is an iconic name on Wall Street thanks to the incredible investment performance of Warren Buffett. Now that Buffett has stepped down as CEO, however, investors need to watch new CEO Greg Abel to see how well he will fill Buffett’s shoes.
While it is unlikely anyone will ever replace Buffett, Abel received high marks in his first solo stint at the conglomerate’s annual meeting. That said, he wasn’t as humorous, according to some attendees. Most investors can probably live with that, since the really important question is what he will do as the CEO. The first big answer is buy one of Buffett’s favorite stocks.
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Image source: The Motley Fool. Berkshire Hathaway has a massive cash pile
Buffett gave Abel a big helping hand when he left the new CEO a $373 billion cash hoard. That figure has since grown to $397 billion after just a single quarter. That cash will be a cushion for the financial giant if there is a recession or bear market, likely allowing it to easily sail through any adversity that comes along.
However, that cash is also a drag on the company’s performance. It is likely that Abel could earn higher returns if that money were invested. To be fair, Berkshire Hathaway is collecting interest from the cash, most of which is invested in U.S. Treasury Bills. But investors don’t buy Berkshire Hathaway expecting the company to earn interest. Berkshire Hathaway’s long and successful history of buying publicly traded stocks and entire companies is the big draw.
Thus, the big question is what will Abel do with all of that cash? Right now, he appears largely content to simply sit on cash because neither he nor Buffett has been able to find big investment opportunities. And yet, the new CEO of Berkshire Hathaway is taking one notable action: He is buying stock in Berkshire Hathaway.
Warren Buffett’s favorite stock
At the end of 2025, Warren Buffett owned 38.4% of Berkshire Hathaway’s Class A shares and 30.2% of its Class B shares. He is by far the company’s largest shareholder. It is fair to suggest that the company he once led as CEO is his favorite stock. But Buffett was careful about buying back the company’s shares while he was CEO.
Buffett would only repurchase Berkshire Hathaway shares when he believed the stock was trading below its intrinsic value. Abel has taken Buffett’s lead on this, consulting the former CEO and now board president before making his final decision. That said, some of the cash on Berkshire’s balance sheet is going to be used to buy Berkshire Hathaway stock.
Clearly, Abel believes Berkshire Hathaway’s stock is undervalued right now. And Buffett agrees. But there’s another little wrinkle here. Abel is buying for his own portfolio, too, with a $15 million investment in the company he now helms. It isn’t unusual for new CEOs to buy shares of the company they are leading. So you have to take Able’s personal investment decision with a grain of salt. However, knowing the signal it would give to the market, his personal buying coinciding with share buybacks is probably a positive sign.
Should you follow Abel’s lead?
Abel has big shoes to fill and, so far, it looks like he has no plans to dramatically alter the way Berkshire Hathaway is run. That should make long-term shareholders happy. The stock buyback and Abel’s personal purchases aren’t going to have a dramatic impact on the business, but they are a sign for both current owners of the stock and those considering buying it. If you think in decades, as do Buffett and Abel, buying Buffett’s favorite stock along with the company and Abel could be a solid choice.
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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.
Greg Abel Is Buying Shares of What Is Probably Warren Buffett’s Favorite Stock. Should You Buy It Too? was originally published by The Motley Fool