Warren Buffett and Greg Abel lead the Berkshire Hathaway annual meeting on May 3, 2025 in Omaha, Nebraska.
David A. Grogen | CNBC
Berkshire Hathaway Shares fell on Monday after the conglomerate reported a sharp decline in fourth-quarter operating profits, while new CEO Greg Abel offered little sign of immediate strategic change in his first communication with shareholders.
The Omaha-based conglomerate’s Class A shares fell 4.9% to start the week. The stock’s decline came after Berkshire reported fourth-quarter operating profit of $10.2 billion, down more than 29% from $14.56 billion a year earlier. The decline was mainly due to weakness in the insurance business, where underwriting profits fell 54% to $1.56 billion, compared to $3.41 billion in the year-ago period.
The results represent an early challenge for Abel, who succeeded Warren Buffett as CEO in early 2026. While investors had widely praised Abel’s first annual shareholder letter for reaffirming Berkshire’s long-standing culture of financial strength and disciplined investing, some had hoped for more aggressive signals on capital use given the company’s growing cash balance.
Berkshire ended 2025 with more than $370 billion in cash and Treasury holdings. In the letter, Abel reiterated that the company does not plan to pay a dividend as long as it believes retained earnings could create more than a dollar of market value for shareholders.
“We were just a little surprised by the lack of any dividend and even a little more surprised by the stated continued unwillingness to pay dividends,” KBW analyst Meyer Shields said in a note. “Given Berkshire’s very significant current liquidity position and, equally important in our view, its prospects for sustainable cash generation, we had seen some opportunity for sustained dividends following the CEO transition.”
Abel instead emphasized reinvestment and opportunistic stock buybacks when Berkshire shares trade below intrinsic value, maintaining Buffett’s long-held capital allocation framework.
However, not all analysts were pessimistic. Brian Meredith of UBS said that while quarterly results were weaker than expected, Berkshire’s defensive characteristics could support the stock.
“In fact, we expect BRK shares to outperform the broader market given heightened geopolitical tensions,” Meredith wrote in a note to clients. “BRK is generally considered to be very defensive. Historically, BRK shares have outperformed during periods of market volatility, benefiting from their diversified revenue streams, liquidity position and broadly U.S.-focused businesses.”
Meredith added that Berkshire’s annual letter reinforces these core principles and values. Looking ahead to 2026 and 2027, he expects management to focus on improving operating margins at BNSF to bring them closer to industry peers and increasing policy retentions at Geico while maintaining profitability.