Berkshire Hathaway shares drop 5% after poor fourth-quarter results
Warren Buffett and Greg Abel cover the Berkshire Hathaway Annual Shareholder Meeting on May 3, 2025 in Omaha, Nebraska.
David A. Grogen | CNBC
Berkshire Hathaway Shares fell Monday after the conglomerate reported a sharp drop in fourth-quarter operating earnings, while new CEO Greg Abel gave few signs of an immediate strategic shift in his first communication with shareholders.
The Omaha-based conglomerate’s Class A shares are down 5% for the week. The stock’s decline comes after Berkshire reported fourth-quarter operating earnings of $10.2 billion, down more than 29% from $14.56 billion a year earlier. The decline was largely due to weakness in the insurance business; Insurance profits fell by 54% from $3.41 billion in the same period of the previous year to $1.56 billion.
The results point to an early challenge for Abel, who was appointed to replace Warren Buffett as CEO in early 2026. While investors generally praised Abel’s first annual shareholder letter, which reaffirmed Berkshire’s longstanding culture of financial strength and disciplined investment, some had hoped for more aggressive signals regarding capital deployment given the company’s growing cash balance.
Berkshire ends 2025 with more than $370 billion in cash and Treasury assets. In the letter, Abel reiterated that the company does not plan to distribute dividends unless it believes retained earnings could create more than a dollar of market value for shareholders.
“We were a bit surprised by the lack of any dividend, and a bit more surprised by the continued reluctance to pay dividends,” analyst Meyer Shields of KBW said in a note. “Given Berkshire’s very significant existing cash position and, in our view, equally important sustainable cash generation prospects, we see some chance of permanent dividends accompanying the CEO transition.”
Abel instead emphasized reinvestment and opportunistic share buybacks if Berkshire shares were trading below intrinsic value, preserving the capital allocation framework long advocated by Buffett.
Still, not all analysts are bearish. UBS’ Brian Meredith said Berkshire’s defensive credentials could support the stock despite weaker-than-expected quarterly results.
“We actually anticipate BRK shares will outperform the broader market given rising geopolitical tensions,” Meredith wrote in a note to clients. “BRK is generally considered very defensive. Historically, BRK shares have outperformed during periods of market volatility, benefiting from diversified earnings streams, liquidity positions and largely US-focused businesses.”
Berkshire’s annual letter reiterates these core principles and values, Meredith added. Looking ahead to 2026 and 2027, he expects management to focus on improving operating margins to bring BNSF closer to its industry peers and increasing policy retention at Geico while maintaining profitability.
