What did Abel's first shareholder letter say? Can Buffett's 60-year record of over 60,000 times returns be continued?

On Saturday, local time, Berkshire Hathaway announced its Q4 financial results.

The data shows that the company’s total net profit, including gains and losses from stock investments, slightly decreased from $19.7 billion in the same period last year to $19.2 billion. However, this figure was affected by a $4.5 billion impairment on holdings of Kraft Heinz and Western Oil stocks. Investment income for the quarter was $13.5 billion.

Operating profit for the fourth quarter totaled $10.2 billion, down more than 29% from $14.56 billion a year earlier. This decline was largely due to weak performance in the company’s insurance business. Underwriting profit dropped from $3.41 billion last year to $1.56 billion, a 54% decrease. The report shows that Berkshire’s insurance underwriting remains dominated by auto insurer Geico, which has seen customer retention decline in recent years due to widespread price increases. Investment income from insurance operations fell from $4.088 billion to $3.1 billion, nearly a 25% decline.

For the full year 2025, revenue was $371.44 billion, virtually unchanged from $371.43 billion last year; operating profit declined 6% to $44.49 billion, and net profit fell 25% to $66.97 billion.

The company stated in its earnings report: “The investment gains (or losses) in any single quarter are generally not material, and the earnings per share data derived from them can be highly misleading for investors who are unfamiliar or nearly unfamiliar with accounting standards.”

Berkshire did not repurchase stock in the last quarter. The group’s cash reserves slightly decreased from the record high of $381.6 billion in Q3 to $373.3 billion.

This earnings report marks the first time that 95-year-old Warren Buffett did not write the annual letter to Berkshire shareholders himself. His straightforward investment wisdom has always been a must-read for many investors. The “Omaha Prophet” announced in May 2025 that he would step down at the end of the year, appointing long-term deputy Greg Abel as his successor. After leading this renowned company for sixty years, Buffett has officially handed over the reins to Abel.

In 2025, Berkshire Hathaway’s Class A shares rose 10%, underperforming the S&P 500’s 16.4% increase. Nevertheless, Buffett’s leadership has created unparalleled wealth for shareholders. In his first annual letter to Berkshire shareholders, Abel paid tribute to his mentor, calling Buffett an “outstanding CEO” and “arguably the greatest investor of all time.”

He pledged to maintain Buffett’s disciplined approach when allocating Berkshire capital. “We are committed to preserving the great legacy built by Warren Buffett and Charlie Munger, and to ensuring this enterprise endures through pursuit of excellence,” Abel wrote. When mentioning the late Vice Chairman Munger, he stated, “I understand your desire for us to succeed together and to succeed in the right way.”

Abel states that since 1965, Berkshire Hathaway’s annualized compound return has been 19.7%, nearly double the S&P 500’s total return over the same period. During this time, Berkshire’s total return exceeded 6,000,000%, while the S&P 500 (including dividends) increased by only 46,061%.

Regarding performance, Abel seeks to reassure investors, emphasizing that Berkshire remains a reliable investment and that core investment principles remain unchanged. “Investing in Berkshire has long been a matter of trust in our founder — now that trust is placed in Berkshire itself. Your capital and our financial resources are intertwined, but they do not belong to us. Our role is that of trustees. This fiduciary responsibility shapes our culture and reinforces a set of values that are not just the result of success but the reason for it.”

Since joining Berkshire in 2000, Abel has been nearly five years away from being named CEO. Charlie Munger, who served as Berkshire’s Vice Chairman from 1978 until his passing in 2023, once said Abel would “preserve the corporate culture,” and Buffett last year described his successor as a “more proactive leader.”

“We will face successes and setbacks in our business. When we fail, we will admit it openly. Doing the right thing also means correcting our mistakes,” Abel wrote. When “a very few” fail to meet standards, the company will “act decisively and without mercy.”

Although Berkshire’s cash reserves remain ample, Abel noted that large cash holdings do not mean the company is exiting investments. Berkshire will continue to maintain “patience and discipline” to create value for shareholders.

Abel will host the company’s annual shareholder meeting on May 2, but Buffett may no longer appear. “I am honored to bear this responsibility—to continue building the company and deepening partnerships in the years ahead. We will move forward with firm resolve and a sense of mission,” Abel wrote.

Excerpt from the Shareholder Letter

To my Berkshire shareholders:

Warren Buffett is arguably the greatest investor in history, and generations have benefited from his investment wisdom. He is also an outstanding CEO. Since acquiring National Indemnity Insurance in 1967, he has consistently pursued the vision of building a top-tier insurance business and has used insurance float to successfully invest across major core industries in the U.S.

He is much more than an investment master. Buffett and his business partner Charlie Munger have built Berkshire into a company with enduring strength. They combine world-class capital allocation with foresight and leadership, enabling the company to transition smoothly from founder-driven to a sustainable enterprise capable of thriving for the next 60 years and beyond.

More valuable than these achievements is that for sixty years, Berkshire has always regarded shareholders as true partners. Buffett often expresses respect and gratitude to Berkshire’s long-term investors—they are among the best owners of any publicly listed company. He invests alongside us, candidly shares successes and failures, and invites us annually to Omaha for open, straightforward communication. His annual letters and direct interactions at the Berkshire annual meeting most clearly reflect Buffett—and Berkshire’s—commitment to walk hand-in-hand with shareholders.

We are fortunate that Buffett remains Chairman of Berkshire, working five days a week, providing guidance in insurance underwriting, non-insurance operations, and capital allocation, including equity investments.

Our deep understanding of the importance of corporate culture and values in our success is also recognized and shared by our unique shareholders—partners in the enterprise. Through our interactions at the shareholder meeting, I know you want us to succeed together, and in the right way.

Berkshire’s culture and values form the foundation of our operating framework, guiding our strategies and choices as we develop Berkshire. As CEO, this framework influences my daily leadership.

The owner’s perspective extends beyond any CEO’s tenure. Logically, I cannot serve as your CEO for the next 60 years—such a goal is overly ambitious. However, in 20 years, even if my tenure is only a small part of Warren’s, my goal is: to make you—or your successors—proud of how much stronger your company has become.

Berkshire’s success depends on nearly 400,000 employees committed to applying our culture and values across all operations—from See’s Candies to GEICO and beyond—in every circumstance. Our progress also benefits from the leadership of the board and our ongoing alignment with our key priorities.

Our culture begins with a partnership attitude. Our shareholders are our partners, and we have earned their trust, which we must continue to maintain. Their interests are central to our decisions. Charlie’s words on May 1, 2021—“Greg will uphold this culture”—will always resonate with me. It reminds me that our culture is our most valuable asset; it calls us to preserve what defines Berkshire; and it is also the challenge to ensure our culture endures.

Stock buybacks are another important capital allocation option. When Berkshire’s stock trades below our conservative estimate of intrinsic value, we will repurchase shares to enhance per-share value for continuing shareholders. When opportunities arise, we may also buy large blocks directly from major shareholders. These purchases allow shareholders to own a larger proportion of Berkshire’s businesses without deploying additional capital.

Our attitude toward dividends is always: as long as each dollar retained has a reasonable chance to create more than one dollar of market value for shareholders, Berkshire will not pay dividends. The board reviews this policy annually.

Whether acquiring a company, buying a stake in a public company, or repurchasing our own shares, we adhere to capital discipline. This principle remains unchanged regardless of how much cash and U.S. Treasuries we hold. We evaluate value carefully, act patiently, and hold long-term—ideally forever.

Our investment portfolio in securities follows the same core principles of capital discipline as our proprietary businesses. A large portion of the portfolio is concentrated in a few U.S. companies, such as Apple, American Express, Coca-Cola, and Moody’s. These are companies we understand deeply, highly respect their management, and expect to generate compound growth over decades. This concentrated investment strategy will continue, with low-profile management of these holdings; but if the long-term economic fundamentals of any company change fundamentally, we may significantly adjust our holdings.

The same standards apply to our investments in Japan, which we consider equally important and offering long-term value creation opportunities comparable to our main U.S. assets. Berkshire’s yen borrowings in Japan are roughly equal to the cost basis of the invested yen, with an average cost of 1.2% and a weighted average maturity of about 5.75 years.

Altogether, these positions totaled $194 billion at year-end, representing nearly two-thirds of our $297.8 billion stock portfolio, providing combined dividends of $2.5 billion, with a return of 10% relative to the original cost basis of $24.5 billion.

At Berkshire, equity investments are the foundation of our capital allocation activities; ultimate responsibility lies with me as CEO. Ted Weschler manages about 6% of our investments, including parts of the portfolio formerly overseen by Todd Combs. Ted’s influence extends beyond these investments; he continues to evaluate major opportunities, provide valuable insights for our businesses, and support Berkshire in various ways.

Our next shareholder gathering will be on May 2, 2026, in Omaha for the annual meeting (our Shareholders’ Day, or what other companies might call “Investor Day”). The familiar format will focus on open communication and direct interaction, with your questions answered in an unscripted manner hosted by Becky Quick. We also look forward to shareholders gaining a deeper understanding of the Berkshire team over time.

This year’s event will include an update from the CEO on Berkshire, as well as two Q&A sessions—one hosted by Ajit and me, and another led by Katie Fama (Burlington Northern Santa Fe Railway), Adam Johnson (President of NetJets and Consumer Products, Services, and Retail), and myself. Katie and Adam will discuss the challenges and opportunities in their respective businesses. This way, we will cover Berkshire’s insurance and non-insurance operations. While each session will naturally focus on topics related to the presenters, shareholders are welcome to ask me any questions at any time.