60 years, over 60,000 times return! Buffett "delivers" the results! Abel's first shareholder letter sends a new signal

On February 28, Berkshire Hathaway disclosed its full-year and fourth-quarter operational results for 2025. This is also the final financial report issued during Warren Buffett’s tenure as CEO of Berkshire Hathaway.

Amid increasing global economic volatility and pressure on the insurance and energy sectors, Berkshire’s overall performance demonstrated strong resilience, though profits were impacted by investment impairments and pressures in the insurance business.

95-year-old Buffett officially stepped down as CEO at the beginning of the year, ending his legendary 60-year career. The baton was passed to Greg Abel. This Saturday, Abel released his first letter to shareholders, attracting market attention.

Revenue Nearly Flat, Net Profit Declines Year-over-Year

According to the financial report, Berkshire’s full-year revenue for 2025 was $371.44 billion, virtually unchanged from $371.43 billion in the same period last year; full-year net profit was $66.97 billion, a significant decline from $88.99 billion last year, but still well above the market’s previous expectation of $43.77 billion.

Quarterly performance shows that in Q4 2025, operating profit was $10.2 billion, down 30% year-over-year; net profit for the quarter was $19.2 billion, down 2.5%. Insurance underwriting operating profit was $1.56 billion, down 54%; insurance investment operating profit was $3.07 billion, down 25%.

In 2025, Berkshire achieved an operating profit of $44.5 billion, below $47.4 billion in 2024 but above the five-year average of $37.5 billion. Abel noted that this result highlights the robustness of our core businesses and also indicates room for further improvement.

Meanwhile, Abel emphasized that when evaluating Berkshire’s annual business performance, we believe “operating profit” remains the best measure, rather than net income affected by investment fluctuations.

“Equally important is the cash generated by our business. In 2025, Berkshire’s net cash flow from operating activities was $46 billion, exceeding the five-year average of over $40 billion, demonstrating our ability to invest across various businesses,” Abel stated.

Abel’s First Letter to Shareholders

On December 31, 2025, 95-year-old Buffett officially stepped down from his role as Berkshire’s CEO, ending a 60-year tenure. Buffett remains chairman and occasionally offers advice, but the company’s annual shareholder letter and meeting speeches have largely been handed over to his successor, Greg Abel.

This financial report also included Abel’s first letter to shareholders. He began by paying tribute to Buffett, recalling Berkshire’s corporate culture centered on trust and integrity, and pledged to continue the effective management philosophy of 60 years: high decentralization, long-term focus, disciplined capital allocation, and a strong emphasis on cash flow safety margins.

“Warren, as chairman of Berkshire, works in the office five days a week. He has helped us with underwriting insurance, managing non-insurance operations, and deploying capital (including equity investments). Warren remains a shareholder of Berkshire (although his shares will be donated to charity over approximately the next ten years after his passing),” wrote new CEO Greg Abel in his letter.

Abel revealed that Berkshire made two new moves in 2025: acquiring chemical company OxyChem and rodent control specialist Bell Laboratories, both considered typical “Warren-style” long-term businesses.

Regarding insurance, Abel stated that the float increased to $176 billion, GEICO restored profitability through price hikes but faces customer attrition challenges, reaffirming that “underwriting discipline is more important than volume”; BNSF Railway’s operating margin improved but still lags industry leaders, requiring continued cost reduction and efficiency gains. BNSF generated $8.1 billion in annual operating cash flow and returned $4.4 billion to Berkshire via dividends.

In equity investments, Berkshire will continue to hold high-quality U.S. stocks such as Apple, American Express, and Coca-Cola, with fruitful investments in Japan. By year-end, their market value totaled $194 billion, nearly two-thirds of Berkshire’s $297.8 billion stock portfolio, providing $2.5 billion in dividends, a 10% return relative to the original cost basis of $24.5 billion.

Berkshire currently holds over $370 billion in cash and Treasury bonds. Abel said this not only safeguards against extreme risks but also serves as “war chest” ready for opportunistic moves.

$4.5 Billion Impairment

Notably, Berkshire wrote down approximately $4.5 billion related to its holdings in Kraft Heinz and Western Oil.

Kraft Heinz, a consumer goods giant heavily invested in by Berkshire years ago, has faced persistent profit pressure due to industry stagnation and intensified brand competition. Western Oil’s performance is highly correlated with international oil prices. The impairment is seen by the market as a rational adjustment by management regarding future returns on some assets, reflecting Berkshire’s conservative accounting style.

Abel stated, “Our investment in Kraft Heinz has been disappointing. Even considering the preferred equity component in our original Heinz investment, our returns have fallen well short of expectations.”

Underperforming the Index: Short-Term Lag but Long-Term Legend

As usual, Berkshire’s letter concludes with a comparison of its long-term performance against the S&P 500. Data shows that in 2025, Berkshire’s per-share market value increased by approximately 10.9%, while the S&P 500 rose 17.9%, meaning Berkshire underperformed the market that year.

However, over the period from 1965 to 2025, Berkshire’s per-share compounded annual growth rate was about 19.7%, far surpassing the S&P 500’s 10.5% annualized return; cumulative gains exceeded 60,000 times, compared to about 460 times for the S&P 500.

This comparison underscores Berkshire’s long-term investment philosophy of “slow is fast.” Short-term underperformance does not alter its legendary status in the history of capital markets.

Abel reaffirmed Berkshire’s discipline: investing in understandable businesses with competitive advantages, partnering with honest managers, concentrating holdings (like Apple and American Express), and timely share repurchases. He admitted that as the company grows larger, compounding becomes more challenging, and future goals are to steadily increase per-share value while strictly managing downside risks.