Hello reader, welcome to the latest issue of HX Weekly!

For this week's issue, we are talking about Warren Buffett and his tenure at Berkshire Hathaway.

We are actually at the Berkshire annual meeting this year in Omaha.

While Buffett will not be doing his traditional Q&A, it is still an incredible event with the gathering of a lot of folks interested in investing.

Here is a note we published yesterday in Truth and Trends regarding the future of Berkshire post-Buffett.

Enjoy.

The First Berkshire Meeting After Buffett

Now What?

Greetings from Omaha, Nebraska.

I’m here with thousands of other investors for the annual Berkshire Hathaway Shareholder Meeting, or “Woodstock for Capitalists.”

But this year feels different.

Warren Buffett, the Oracle of Omaha himself, has stepped aside. So the meeting is taking place under new leadership for the first time in decades.

While the transition has been telegraphed for years, the reality is now here.

The market has already reacted to Buffett’s departure.

Berkshire’s stock has drifted lower following the announcement last year, a signal that investors are asking questions.

The biggest being: Can the next CEO live up to one of the greatest investing track records in history?

The End of an Era — and a Test of Legacy

Buffett and his partner, Charlie Munger, transformed Berkshire from a struggling textile mill into a sprawling empire that owns everything from railroads to insurers to energy companies.

Along the way, it compounded capital at a rate that turned modest investments into generational wealth.

But here’s what most people get wrong…

Buffett and Munger weren’t just “value investors.” They were something much more powerful.

They were common-sense growth investors with extraordinary patience.

To understand what happens next for Berkshire, you first need to understand what made the company great in the first place.

The first pillar was common sense.

Buffett and Munger didn’t rely on complex models or Wall Street jargon. They focused on simple questions.

Does the business make money? Will it still be relevant in 10 or 20 years? Does it have a competitive advantage?

That’s how they ended up buying companies like Coca-Cola — not because it was statistically “cheap,” but because it was obviously dominant.

The second pillar was longevity.

While most investors obsess over quarterly earnings, Buffett was happy to hold positions for decades.

This allowed compounding to do its work. A +20% annual return doesn’t sound extraordinary until you realize what it becomes over 30 or 40 years.

That's how a $1.3 billion investment in Coca-Cola turned into tens of billions — not through timing, but through time.

The third, and most misunderstood, pillar was growth.

Despite the "value investor" label, Buffett's biggest wins came from companies that grew earnings relentlessly over long periods.

After all, the majority of Coca-Cola's return came not from valuation changes but from earnings growth.

That’s a critical distinction.

Buffett wasn’t buying cheap stocks. He was buying inevitable growth at a reasonable price.

Now enter Greg Abel.

Abel is no stranger to Berkshire. He has been inside the machine for decades, helping build its energy business into a powerhouse.

He understands the culture. He understands the discipline. And by all accounts, he is a steady, rational operator.

But he is also very different.

His track record leans heavily toward regulated, capital-intensive businesses — utilities, energy infrastructure — and steady cash flow operations.

These are excellent businesses, but they are not exactly known for explosive growth.

That raises an uncomfortable question…

Does Abel have the same instinct for identifying long-term growth stories that defined Buffett’s career?

What to Expect Out of the New Leadership

There’s another layer here that investors can’t ignore.

Berkshire has always been more than just a stock. It’s been a story. A brand. A belief system.

And at the center of that system was Buffett himself.

For decades, investors trusted Berkshire not just because of the numbers, but because of the man.

His annual letters were required reading. His public appearances moved markets. His presence alone created what many call the “Buffett premium.”

Even today, Berkshire rarely trades at a discount to its underlying assets. Investors are willing to pay up for the quality of the businesses, and the trust in management.

Now that trust must transfer. And that’s not automatic.

If there’s one thing working in Abel’s favor, it’s this: He’s inheriting an enormous pile of cash.

Berkshire is sitting on a record war chest — hundreds of billions of dollars — that have yet to be deployed. Many investors believe this was intentional.

That Buffett, in his final years at the helm, chose patience over action to give his successor maximum flexibility.

In other words, Abel isn’t starting from scratch.

He’s starting with optionality.

History shows that Berkshire does some of its best work in moments of stress.

During the financial crisis, Buffett deployed capital into companies like Goldman Sachs and Bank of America on extremely favorable terms, locking in high returns and reinforcing Berkshire’s reputation as a lender of last resort.

The question now is whether Abel will have, and use, that same playbook. Because how he deploys this capital will define his tenure.

Right now, the market seems to be in “wait and see” mode.

Berkshire’s stock hasn’t collapsed, but it hasn’t rallied either. That tells you everything you need to know.

Investors aren’t abandoning the story. But they're no longer unquestioningly trusting it. They want proof.

So, what should investors be watching this weekend?

Not just the numbers… Not just the guidance… But the mindset.

Does Abel talk like Buffett? Does he emphasize discipline, patience, and long-term thinking? Or does he shift toward a more traditional, conservative operating approach?

More importantly, does he show a willingness to make bold moves when the opportunity presents itself?

Because that’s what made Buffett different. He wasn’t just careful — he was opportunistic.

The Bottom Line

Berkshire Hathaway is one of the greatest investing machines ever built. Its foundation, common sense, longevity, and growth remain intact.

But leadership matters.

And while Greg Abel may be the right person to preserve Berkshire’s culture, the real test will be whether he can evolve it.

Because Buffett won't write the next chapter. It will be written by the decisions that come next.

And with a massive war chest, a shifting market, and the weight of history behind him…

Abel won’t have to wait long to prove whether he’s up to the task.

On a personal note, if you’re also in Omaha attending the Annual Shareholder Meeting, I’d love to meet you.

I’ll be handing out signed copies of a new children’s book I co-authored for charity.

It’s called “The Story of Charlie Munger,” and I wrote it to hopefully pass along some of the timeless wisdom we discussed today to the next generation.

Tomorrow, I’ll be attending VALUEx BRK 2026, an exclusive gathering of investors organized by Guy Spier at the Marriott.

The event brings together some of the sharpest minds in value investing for a day of discussion, networking, and idea sharing ahead of the main meeting.

Then on Saturday morning, you can find me outside the main Berkshire Hathaway meeting venue.

And later that afternoon, I’ll be speaking on a panel at The 12th Annual Global Investor Conference about the future of Berkshire — a fitting topic given everything we’ve just discussed.

If you're in town, come say hello!

Here is our favorite note about Buffett with our unorthodox view of his success.

Warren Buffett the #GOAT

...of GROWTH Investing!

This first note will make a point that many of my regular readers have heard me make in the past…Buffett has made his money as a GROWTH investor rather than a VALUE investor.

What does this mean?

Look up the definition of "value investor," and you get the following…

That next sentence in that article says…

“Warren Buffet is probably the best-known value investor today…”

What does it mean to be a value investor?

Read the writings of Benjamin Graham and many of the "founding fathers" of value investing, and you will read about them buying companies at less than "book value, " which is the accounting value of their assets.

There will also be many examples of buying a company below the replacement value of its assets or liquidation value.

These “buy $1 of assets for $0.50” opportunities used to exist in the stock market fifty years ago. That was before these strategies became more well known, the explosion in the asset management business and – most importantly – the Internet.

Outside the complex distressed security market, there are very few of these opportunities in the stock market anymore—certainly not large ones.

Buffett began his professional investing career in the 1950s and 1960s when these opportunities still existed.

Looking at how he ACTUALLY made his money, though, you see that it was NOT on these types of opportunities.

Instead, it was buying large companies that would GROW their earnings tremendously.

Let’s look at his most famous investment – The Coca-Cola Company (NYSE: KO).

He initiated this position in 1988, and his $1.3 billion investment has turned into a $24.5 billion stake or a profit of $23 billion.

Here is a Financial Analysis table of the key financial metrics for KO since 1988 and through the end of 2023…

Let’s discuss both tables.

We don’t have precise data, but Buffett began buying KO in 1988. For the purposes of our analysis, we ran our numbers as if he had taken four years to enter the position.

Across those four years, the stock's media price-to-earnings (P/E) ratio was 15.8x. Over the next three decades, the median P/E ratio was slightly less than 27x.

This means that the appreciation from a multiple perspective was +70%.

Also note that at 16x forward EPS back in 1988, KO was a +10% premium to the multiple of the S&P 500. Even the next year (1989) was only a -15% discount, and 1990 was a premium again.

Now, let's look at earnings per share (EPS) over the period. It has grown +2370% from $0.18 per share to almost $2.50 per share in 2023.

Looking at the almost +2200% increase in the stock price across this thirty-five-year period, the expansion in earnings multiple (+70%) certainly helped, but the REAL driver was earnings growth.

This was also a stock that was NOT trading at a discount to asset value or the overall stock market at the time.

The VALUATION of KO stock did not drive the appreciation in Buffett's stake; rather, it was the GROWTH in earnings that did.

Now, let's go back to the definition of "Value Investing" at the top. It does take into account this situation.

It says value investors seek "…stocks that they think the stock market is underestimating."

This captures what happened with KO stock.

It wasn’t that it was trading at a discount to the asset value at the time or the stock market, but it certainly was excellent value given the future growth that would happen. In THAT sense, it certainly was a good "value" purchase.

This means the critical stock analysis was NOT about understanding the VALUE but rather about handicapping the GROWTH.

It is interesting to note that the return we quoted above was the return of his stock holdings, not his total returns.

If we consider the dividends that were paid, that is another +952% return. This brings his return to over +3000% on his KO holding.

The annual dividend has grown from $0.08 per share to $1.84 per share or +2200%. That number is almost the same as the earnings growth.

Again, the key to this investment is the GROWTH of the company.

While Buffett is lauded as the most extraordinary living (or ever) VALUE investor of all time, we think the KEY to his success has been identifying GROWTH.

This brings us to our favorite Buffett quote…

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

This is something that every young investor should take to heart…

Finally, another one of our favorite notes with some surprising facts about Buffett that most folks don't know!

Have a great weekend!

Think You Know Warren Buffett?

We Have Some Little-Known Facts

As we wrote earlier this week, legendary investor Warren Buffett’s 94^th birthday will be tomorrow, Friday, August 30.

Over the decades, MILLIONS of pages have been written about Buffett, so we wanted to offer some new thoughts.

On Tuesday, we argued that the key to Buffett's success has been growth investing rather than value investing. We don’t think many folks have made that case before…

Today, we were originally going to share some great Warren Buffett quotes.

In the last six months, though, we have learned something surprising. Buffett doesn't give a good quote!

We mention this because we have been publishing quotes daily on HX Research socials (Twitter, Facebook and Instagram—do you follow us?) and have compiled over 1,000 quotes from great investors.

Buffett's partner, Charlie Munger, is a quote machine. They are smart, short, funny, and often incredibly clever. He has awesome quotes!

Buffett is also smart, funny, and incredibly clever. His quotes just aren’t that great.

We published our favorite earlier this week. We like that one so much that we are going to publish it here again…

That one is a “10 out of 10”! There are some other decent ones, but they aren't spectacular as a group.

As we were looking for quotes, we started looking up facts about Buffett. THAT is where we found some fascinating stuff!

Many are well-known, but a few might surprise even the most ardent fan of Buffett.

Here they are…

1. He Made $53,000 By the Age of 16

He started making money at the age of six! He walked around his neighborhood selling packs of gum for a nickel each.

When his father became a congressman and the family moved to D.C., he delivered The Washington Post newspaper and made $175 a month—more than $3000 a month in today's dollars. He was thirteen years old at the time.

The article I read said he had made $53,000 by 16. That is an amazing $848,000 in today’s dollars. Wow!

The man was BORN to make money!

2. He Made 94% of His Wealth AFTER He Turned 60 Years Old

This is fascinating for a guy who had made almost $1 million by age 16.

At 52, he was worth $376 million, so it's not like he was sitting around doing nothing.

Since then, though, his net worth has gone through the roof! It currently stands at over $140 billion! That is the power of compounding…

Also, I just turned 52, five days before Buffett's birthday this year. I am definitively NOT worth $376 million, but that gives me some hope for the next forty years!

3. He Thought Graham and Dodd Were Dead

Buffett first attended my alma mater – the Wharton School of the University of Pennsylvania. He studied there for two years but then moved to the University of Nebraska, where he graduated at 19.

Buffett then applied to Harvard Business School and was rejected. After the rejection, he discovered that his investing idols, Benjamin Graham and David Dodd, were professors at Columbia Business School.

“I wrote them a letter in mid-August,” Buffet said. "I said, 'Dear Professor Dodd. I thought you were dead, but now that I found that you're alive and teaching at Columbia, I would really like to come.' And he admitted me."

That is ONE way to fill out an application!

4. His Face Was on Cherry Coke Cans in China

I don't know that I have much to say about this one…going to let it sit right here…

5. He Loves the TV Show Breaking Bad

Everyone I know says this is one of the best TV shows of all time. Personally, I have never watched it because I don't like to watch shows that are too depressing.

My father's family is from New Mexico and lived the show, so I figure—why do I need that in my life now?

The show is too depressing for me, but Warren Buffett, "The Oracle of Omaha," and the world's most famous investor, loves it!

He has some surprises in him…

We hope you enjoyed some of these facts about Buffett that may have surprised you!

We read over a dozen articles on the subject and want to give full credit to this one.

It was by FAR the most informative and fun.

We hope that you’ve enjoyed this week’s issue of HX Weekly…

Do you have any thoughts, questions, or feedback? Tell us more in the comment section or at [email protected].