Shares post biggest fall since Buffett named Abel successor
Berkshire Hathaway shares fell sharply on Monday after the conglomerate reported results that missed some analysts’ expectations and signaled a cautious approach to deploying its massive cash balance. The decline was the steepest since Warren Buffett said last May that Greg Abel would become chief executive in 2026, a succession announcement that also triggered an unusually large one-day drop in the stock.
Class A shares fell as much as 5.3% by early afternoon. Class B shares, which represent about 1 divided by 1,500 of a Class A share, declined by a similar percentage. On May 5 last year, the stock fell as much as 6.8% after Buffett unexpectedly said Abel would take the top job starting in 2026. Buffett has led Berkshire since 1965 and will remain chairman.
Operating profit falls 30% as insurance weakness deepens
Berkshire said on Saturday that fourth-quarter operating profit, which excludes gains and losses from its common stock portfolio led by Apple, declined 30% to $10.2 billion. The drop was driven in part by a broad decline in insurance earnings. Profit at Geico and other insurance businesses fell 38% overall, weighing heavily on the quarter.
In his first annual shareholder letter, Abel warned that Geico may face continued pressure to retain customers as competitors cut auto insurance rates. He also said other insurance and reinsurance operations face pricing pressure as more capital enters those markets, a dynamic that can compress returns as firms compete more aggressively for premium volume.
Cash reaches 373 billion as buyback pause continues
Investors also focused on Berkshire’s balance sheet posture. Abel addressed the company’s $373 billion cash position, saying it does not reflect a retreat from investing. At the same time, he provided no signal that Berkshire plans to restart share repurchases after about one and a half years without buybacks, and he did not indicate any move toward initiating a dividend.
Abel emphasized a conservative approach to capital allocation, writing that Berkshire will assess value carefully, act patiently, and hold investments for the long term, “preferably forever.” The message reinforced Berkshire’s traditional discipline but offered limited near-term catalysts for investors looking for cash deployment in the form of acquisitions, buybacks, or dividends.
Analysts cite softness beyond insurance across major units
Some analysts said the quarter’s weakness extended beyond insurance. Meyer Shields of Keefe, Bruyette and Woods, who rates Berkshire underperform, said the results broadly missed forecasts and cited weakness at BNSF railroad as well as softer performance in Berkshire’s energy, manufacturing, and retailing operations. Shields lowered his 2026 earnings forecast by 5%.
The combination of lower operating profit, pressures in key businesses, and an unchanged stance on cash deployment left the market focused on whether Berkshire’s earnings power can reaccelerate under Abel’s leadership and whether capital returns will resume as valuations and opportunities evolve.
