News: Berkshire Hathaway Q4 Earnings Fall Nearly 30% in Warren Buffett's Final Quarter as CEO

The 29% drop in quarterly operating earnings was primarily driven by two factors: weaker results from Berkshire's insurance businesses and significant writedowns on major investment positions. According to Reuters, the company wrote down investments in Kraft Heinz and Occidental Petroleum, two long-standing Berkshire holdings that had faced sustained pressure.

Berkshire's insurance operations — which include GEICO, Berkshire Hathaway Reinsurance Group, and General Re — have historically been the engine of the company's cash generation. The fourth quarter saw a notable decline in insurance income, though Berkshire's press release urged investors to read the full 2025 annual report rather than relying on the summary results for investment decisions.

Looking at the broader full-year picture, Berkshire's quarterly results through 2025 showed significant variability. Third-quarter net income reached $30.8 billion, boosted by investment gains, with operating income of $15.8 billion. Second-quarter net income was $12.4 billion with operating income of $14.75 billion. The first quarter saw just $4.6 billion in net income amid market volatility. This quarterly swing underscores how Berkshire's GAAP earnings can be heavily influenced by unrealized gains and losses on its vast equity portfolio.

In his last quarter as CEO, Buffett continued the portfolio repositioning that defined his final years at the helm. According to reporting from Motley Fool, Berkshire reduced its exposure to technology and banking stocks during Q4 2025, while making a significant new investment in a leading energy company.

The shift away from technology was notable given that Apple had long been Berkshire's largest equity holding. Buffett had been steadily trimming the Apple position throughout 2024 and 2025, generating massive realized gains that boosted operating earnings in prior quarters. The move into energy aligns with Berkshire's existing substantial stake in Occidental Petroleum — though the Q4 writedown on that same position highlights the volatility inherent in the sector.

Greg Abel inherits a $318 billion equity portfolio with approximately 61% of invested assets concentrated in just five stocks, according to Motley Fool analysis. Buffett had previously identified eight "indefinite" holdings that he expected Abel to maintain, suggesting continuity in the core portfolio strategy. The concentration risk, however, remains a topic of debate among analysts, particularly as the new CEO navigates his own investment philosophy while respecting his predecessor's legacy.

Perhaps the most striking feature of Berkshire's balance sheet heading into the Abel era is its enormous cash position. As of the third quarter of 2025, Berkshire held $76.3 billion in cash and cash equivalents plus $305.4 billion in short-term investments, totaling $381.7 billion — a figure that dwarfs the GDP of most countries.

The cash hoard reflects Buffett's long-standing frustration with elevated equity valuations and his discipline in waiting for attractive acquisition opportunities. Berkshire generated $30.6 billion in operating cash flow during fiscal year 2024, with $19 billion directed toward capital expenditure, leaving $11.6 billion in <a href="/posts/2026-02-26/nflx-analysis-after-a-40-drawdown-netflixs-warner-bros-bid-puts-a-streaming-empire-at-a-crossroads">free cash flow</a>. The company repurchased $2.9 billion in stock during 2024, a modest amount relative to its cash generation.

For Abel, the cash mountain represents both opportunity and expectation. Investors have long anticipated a major acquisition or deployment of capital that would put the cash to work at attractive returns. With total assets of $1.23 trillion and total stockholders' equity of $700.4 billion as of Q3 2025, Berkshire's financial position remains fortress-like. The price-to-book ratio of 1.55x suggests the market values the company at a modest premium to its net assets — a reflection of uncertainty about returns on that enormous cash pile under new leadership.

The release of Greg Abel's first annual shareholder letter marked a symbolic changing of the guard at one of America's most iconic companies. Buffett's annual letters had become cultural artifacts in the investing world — witty, folksy, and packed with investment wisdom accumulated over six decades at the helm. The question of whether Abel could match that communication style while charting his own course was a central point of speculation.

Benzinga described the Q4 release as Berkshire's "first earnings release in decades without legendary investor Warren Buffett serving as CEO," highlighting the profound transition underway. Abel, a 62-year-old Canadian who ran Berkshire Hathaway Energy before being named successor, faces the challenge of managing a sprawling conglomerate that spans insurance, railroads, utilities, manufacturing, and retail.

Investopedia noted that Berkshire's "legion of loyal investors" had something new to look forward to with Abel's letter. The transition raises fundamental questions about Berkshire's identity and strategy going forward: Will Abel pursue the large-scale acquisitions that eluded Buffett in his final years? Will the investment portfolio become more diversified? And can the decentralized management structure that Buffett championed — where subsidiary CEOs operate with minimal oversight from Omaha — continue to function without his singular authority?

At $505.22 per share, BRK-B trades at a trailing price-to-earnings ratio of 16.16x, based on reported <a href="/posts/2026-02-22/deep-dive-how-to-analyze-a-companys-earnings-report-revenue-eps-guidance-and-what-actually-moves-the-stock">earnings per share</a> of $31.27 over the past four quarters. The stock sits 7% below its 52-week high and about 2% above its 50-day moving average of $495.51, suggesting relatively stable technical positioning.

Zacks Research flagged that Berkshire is "trading at a discount to its 52-week high" but cautioned that a "premium valuation, soft returns on capital, and muted earnings outlook raise caution for investors." The return on equity of 4.4% in Q3 2025 — depressed by the massive cash hoard earning lower returns than deployed capital — highlights the drag that conservative balance sheet management places on profitability metrics.

The near-term outlook is further complicated by the geopolitical environment. With U.S. and Israeli strikes on Iran dominating headlines on the same day as Berkshire's earnings release, investors face a uniquely volatile backdrop. Berkshire's historically defensive characteristics — its insurance float, diversified operations, and enormous cash reserves — could make it a relative safe haven if markets sell off sharply. However, the declining operating earnings trajectory and leadership transition add uncertainty that Buffett's presence had long mitigated.