Berkshire Hathaway shares drop 5% after poor fourth-quarter results
Warren Buffett and Greg Abel recently addressed shareholders at the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska on May 3, 2025. However, the conglomerate’s shares took a hit on Monday following a sharp decline in fourth-quarter operating earnings. New CEO Greg Abel’s first communication with shareholders did not provide many signs of an immediate strategic shift.
Berkshire Hathaway’s Class A shares dropped 5% after the company reported fourth-quarter operating earnings of $10.2 billion, a significant decrease of more than 29% from the previous year. The decline was primarily attributed to weakness in the insurance business, where underwriting profits plummeted by 54% to $1.56 billion.
This challenging start for Abel, who took over from Warren Buffett at the beginning of 2026, raised concerns among investors. While Abel’s first annual shareholder letter reaffirmed Berkshire’s commitment to financial strength and disciplined investing, some were hoping for a more aggressive approach to capital deployment given the company’s substantial cash reserves of over $370 billion.
Despite calls for dividends, Abel reiterated Berkshire’s stance on retaining earnings to create value for shareholders. Analysts like Meyer Shields of KBW expressed surprise at the absence of dividends but acknowledged the company’s focus on reinvestment and share repurchases when the stock trades below intrinsic value.
UBS analyst Brian Meredith highlighted Berkshire’s defensive characteristics, suggesting that the stock could outperform the market during periods of volatility. He noted that Berkshire’s diversified earnings streams, liquidity position, and U.S.-focused businesses have historically helped it weather market uncertainties.
Looking ahead, Meredith expects management to concentrate on improving operating margins at BNSF and increasing policy retentions at Geico while maintaining profitability. The core principles and values outlined in Berkshire’s annual letter are expected to guide the company’s strategy in 2026 and 2027.
Overall, while Berkshire Hathaway faces challenges in the current economic climate, investors remain optimistic about the company’s long-term prospects under Abel’s leadership. The focus on strategic investments and capital allocation aligns with the legacy established by Warren Buffett, ensuring continuity in Berkshire’s approach to value creation for shareholders.
