ii view: Berkshire Hathaway looks forward under new CEO

Fourth-quarter results to 31 December 

• Operating earnings down 30% to $10.2 billion (£7.65 billion)
• Net earnings attributable to shareholders down 2.5% to $19.2 billion
• Cash held of $373 billion, down from $381 billion in Q3

ii round-up:

New chief executive Greg Abel looked to reassure Berkshire Hathaway Inc Class B (NYSE:BRK.B) investors after succeeding legendary investor Warren Buffett at the start of the year. 

A policy of disciplined investment and financial conservatism will continue to be pursued, with Buffet now chairman of the company, still present in the office five days a week and offering operational and investment guidance.   

Fourth-quarter operating profit, excluding investment gains or losses, fell 30% from a year ago to $10.2 billion (£7.65 billion), largely due to weakness across Berkshire’s insurance operations. 

Shares in the S&P 500 company fell 4% in post results US trading having come into these latest numbers up by a tenth in 2025. The results follow the start of US and Israeli military action in Iran. The S&P 500 index rose 16% last year and the Dow Jones 13%. 

Berkshire operates over 90 businesses including insurance operations, railway and energy companies and manufacturing businesses. 

Insurance underwriting profits fell 54% to $1.56 billion, with insurance investment income down by a quarter to $3 billion. 

Berkshire profits including investment gains and losses fell 2.5% to $19.2 billion. Berkshire investments continue to include Apple Inc (NASDAQ:AAPL), Coca-Cola Co (NYSE:KO), American Express Co (NYSE:AXP) and Moody’s. 

Group cash held of $373 billion, available either to invest or even acquire companies, was down from the third quarter’s $381 billion. Berkshire bought back none its of own shares during this latest quarter despite the mountain of cash.   

Berkshire profits including investment gains and losses for the full year fell by a quarter year-over-year to $66.97 billion, hindered by an $8.25 billion write-down of investments in Kraft Heinz and Occidental. 

ii view:

Conglomerate and investment company Berkshire Hathaway is tracked and invested in by large and small investors alike. Its shares trade on the New York Stock Exchange under the two classes of A and B shares, with the originally established A class shares carrying considerably more voting power. New CEO Greg Abel joined Berkshire in 2000. 

For investors, the previous death of key executive Charlie Munger and the stepping back of legendary investor Warren Buffett may reduce the key attraction for many investors in the company. The continued lack of a major acquisition financed by its cash mountain could be frustrating some investors. Costs generally for businesses remain elevated, while earnings for insurance underwriting can prove volatile given potential exposure to events such as wildfires and earthquakes. 

To the upside, Warren Buffett’s judgement in making Greg Abel CEO will have played its part. The group’s diversity of businesses regularly sees gains for one division countering falls for another. The absence of any major business acquisitions likely underlines management’s patience in waiting for an appropriate buying opportunity, while the absence of share buybacks in 2025 could suggest that management believes there will be a better buying opportunity ahead.

For now, the stepping back of Mr Buffett will likely see investors continuing to reassess prospects. That said, Abel’s own experience, a cash mountain, and Buffett’s continuing guidance will likely attract the backing of investors.

Positives: 

• Diverse portfolio of industries and businesses
• Significant cash held

Negatives:

• Subject to macro-economic and geopolitical uncertainties
• An eventual full exit by Warren Buffett

The average rating of stock market analysts:

Hold