Berkshire Hathaway shrinks cash pile in Buffett's last act as CEO. Here's how successor Greg Abel is now looking to spend.

By Tomi Kilgore

Company's cash hoard at end of 2025 - which Abel noted was not a sign of an investment retreat - was down 2.1% from September to $373.3 billion

Berkshire Hathaway's cash holdings have dipped, and the new CEO, Greg Abel, is evaluating opportunities.

It's Greg Abel's Berkshire Hathaway now, but the last act of Warren Buffett as CEO appears to have been putting some of the conglomerate's record cash hoard to work.

And in the first annual shareholder letter not penned by Buffett in 60 years, Abel said he is currently evaluating other opportunities, but will remain patient and disciplined in making investments, even in Berkshire's own stock (BRK. B) (BRK. A).

Abel assured shareholders that the way decisions are made, and how capital is allocated under his watch, will continue on the path set by Buffett "into perpetuity." He also noted that as chairman, Buffett will still be going to the office "five days a week" to help make decisions.

Berkshire's annual report released early Saturday showed that the cash held as of Dec. 31 was $373.31 billion, down from the record $381.67 billion held at the end of the third quarter but still up 11.7% from the end of 2024.

"Many times in Berkshire's history, some observers have suggested that our substantial cash position signals a retreat from investing," Abel wrote. "It does not."

And while Abel said share repurchases were an "important capital-allocation option," the company didn't buy back any stock during the fourth quarter, extending that trend to six quarters.

Berkshire's stock was little-changed during the fourth quarter, while the S&P 500 index SPX rose 2.4%. So far this year, the stock has edged up 0.5% through Friday, to match the S&P 500's performance.

Abel's first shareholder letter also comes at a time that Berkshire's insurance business has struggled, to the point that the company will not be looking to grow the business for a while.

Following are some other key insights from Abel's letter to shareholders.

Investments in Japan are as important as U.S. holdings

Abel noted that a large portion of Berkshire's equity investments are held in a small number of U.S. companies, notably investments in Apple (AAPL), American Express (AXP), Coca-Cola (KO) and Moody's (MCO). The total market value of those holdings was $158.6 billion as of Dec. 31.

"This concentrated approach will continue, with limited activity in these holdings, though we may significantly adjust a holding if we see fundamental changes in its long-term economic prospects," Abel wrote.

The same methodology in choosing investments in American companies is used in finding opportunities in Japan, "which we view as comparable to our major U.S. holdings in importance and long-term value-creation opportunity."

The largest Japan holdings, with a total market value of $35.37 billion, are Mitsubishi (JP: 8058), Itochu (JP: 8001), Mitsui & Co. (MITSY), Marubeni (MARUY) and Sumitomo (SSUMY).

Kraft Heinz holding has disappointed

As Buffett said in last year's shareholder letter, there have been some mistakes in Berkshire's investments. Abel noted that Kraft Heinz was one of them.

"Our investment in Kraft Heinz has been disappointing," Abel wrote. "Even after considering the preferred equity component in our original Heinz investment, our return has been well short of adequate."

Abel appeared to be setting the stage for Berkshire make a big change.

In January, Kraft Heinz disclosed that Berkshire "may offer to sell" its 325.4 million shares stake in the company.

Buffett was a big backer of the Kraft Foods and Heinz merger in 2015. After a decade of share price underperformance, Kraft Heinz said in September it will break up. But new CEO Steve Cahillane said he was putting the breakup plan on hold, so he can focus on fixing the problems.

Earnings fall for the quarter and year

Net income in the latest quarter fell 2.5% from the same period a year ago to $19.2 billion.

Operating earnings, which exclude investment gains and other nonrecurring items, declined 29.8% to $10.2 billion for the quarter, and were down 6.2% for the year to $44.5 billion.

Abel noted, however, that while 2025 earnings showed a decline, they were above the $37.5 billion in earnings Berkshire has averaged over the past five years, which he said underscores the durability of Berkshire's operating business, while also showing there's room for improvement.

Insurance struggles could continue

Central to the weakness in operating earnings during the fourth quarter was Berkshire's insurance business, in which the total of insurance underwriting and insurance-investment income dropped 38.2% to $4.6 billion.

While the company reassesses how insurance policies are priced, Abel said the businesses, which includes Geico, will not be growing for a while.

"Their performance reflected both their inherent strengths and an industry that, after several years of needed adjustments to pricing and policy terms, in 2025 began to experience a deceleration or reversal of these trends, particularly in the latter half of the year," Abel wrote. "This likely means we will write less property and casualty business for a period of time."

Ajit Jain, who Abel said is "peerless" in pricing insurance risk, runs Berkshire's insurance operations. Before Abel was named as Buffett's successor last year, Jain was considered a top candidate.

Buffett remains a fixture at the office

Here's how Abel's first shareholder letter started: "Warren Buffett is arguably the greatest investor of all time, with generations benefiting from his investment acumen."

He said, however, that Buffett shouldn't be viewed solely as an investment guru. What will endure, according to his successor as CEO, is how he ran his businesses, and how he treated shareholders as partners.

And Buffett may no longer be running the business, but Abel reminded shareholders that Buffett will still be in the office "five days a week" as chairman, and will continue to have a say in which stocks Berkshire buys.

-Tomi Kilgore

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02-28-26 1106ET

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