Berkshire Hathaway has resumed share buybacks for the first time since May 2024, marking a significant development as new CEO Greg Abel reinforces Warren Buffett's long-standing principles. The company announced the resumption of repurchases on Wednesday, with Class A shares initially falling but later rebounding after the news.
Key Takeaways
Berkshire Hathaway has resumed share buybacks for the first time since May 2024, signaling confidence in its stock valuation under new CEO Greg Abel. The company's Class A shares initially fell following earnings but rebounded after the announcement of repurchases and Abel's personal investment.
The conglomerate reported that fourth-quarter operating profit, excluding gains and losses on common stocks led by Apple, fell 30% to $10.2 billion. This decline was driven largely by a 38% drop in insurance profits, including significant pressure at Geico and other insurance businesses.
In his first annual letter to shareholders, Abel expressed caution about investing the company's cash but reiterated Berkshire's commitment to long-term value creation. He did not indicate any plans to resume stock buybacks or pay a shareholder dividend, maintaining Buffett's approach of reinvesting profits. However, the recent announcement of share repurchases signals a shift in strategy.
Abel also disclosed that he personally purchased $15 million worth of Berkshire stock, equal to his after-tax annual salary. He plans to continue using his full salary amount to purchase Berkshire shares every year, demonstrating alignment with shareholders. This move comes as some investors have questioned whether Buffett's successor has comparable 'skin in the game.'
Analysts had mixed reactions to the results and Abel's letter. Meyer Shields of Keefe, Bruyette & Woods rated Berkshire 'underperform' and lowered his 2026 earnings forecast by 5%. In contrast, Brian Meredith of UBS highlighted Berkshire's defensive characteristics and expected the stock to outperform the broader market amid geopolitical tensions.
Berkshire ended 2025 with $373.3 billion in cash, providing Abel with significant firepower for potential acquisitions. However, the company has sold more stocks than it bought for the 13th consecutive quarter and had not conducted share buybacks for six straight quarters until this recent announcement.
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