Warren Buffett and Greg Abel walkthrough the Berkshire Hathaway Annual Shareholders Assembly in Omaha, Nebraska on Could 3, 2025.
David A. Grogen | CNBC
Berkshire Hathaway shares fell Monday after the conglomerate reported a pointy decline in fourth-quarter working earnings, whereas new CEO Greg Abel supplied few indicators of a direct strategic shift in his first communication with shareholders.
Class A shares of the Omaha-based conglomerate slid 5% to begin the week. The inventory’s decline got here after Berkshire posted working earnings of $10.2 billion for the fourth quarter, down greater than 29% from $14.56 billion a yr earlier. The drop was pushed largely by weak point within the insurance coverage enterprise, the place underwriting earnings tumbled 54% to $1.56 billion from $3.41 billion within the year-earlier interval.
The outcomes mark an early problem for Abel, who succeeded Warren Buffett as CEO initially of 2026. Whereas traders had broadly praised Abel’s first annual shareholder letter for reaffirming Berkshire’s long-standing tradition of monetary power and disciplined investing, some had hoped for extra aggressive indicators on capital deployment given the corporate’s swelling money steadiness.
Berkshire ended 2025 with greater than $370 billion in money and Treasury holdings. Within the letter, Abel reiterated that the corporate doesn’t plan to provoke a dividend as long as it believes retained earnings can create greater than a greenback of market worth for shareholders.
“We have been just a bit stunned by the absence of any form of dividend, and a little bit extra by the said sustained unwillingness to pay dividends,” Meyer Shields, an analyst at KBW mentioned in a notice. “Given Berkshire’s very important present money place and — simply as vital, in our view — its prospects for sustained money era, we might seen some probability of persistent dividends accompanying the CEO transition.”
Abel as an alternative emphasised reinvestment and opportunistic share repurchases when Berkshire inventory trades beneath intrinsic worth, sustaining the capital allocation framework lengthy championed by Buffett.
Nonetheless, not all analysts have been bearish. Brian Meredith of UBS mentioned that whereas quarterly outcomes got here in weaker than anticipated, Berkshire’s defensive traits might assist the inventory.
“We really anticipate BRK’s shares will outperform the broader market given the elevated geopolitical tensions,” Meredith wrote in a notice to purchasers. “BRK is usually thought of very defensive. Traditionally, BRK shares have outperformed during times of market volatility benefiting from their diversified earnings streams, liquidity place, and largely U.S.-focused companies.”
Meredith added that Berkshire’s annual letter reiterated these core ideas and values. Waiting for 2026 and 2027, he expects administration to give attention to bettering working margins at BNSF to convey them nearer to trade friends and boosting coverage retentions at Geico whereas sustaining profitability.
