r/BerkshireHathaway

What does everybody think? Personally, I didn’t hear anything that will move the ticker up on Monday. In fact, I feel like it is going to remain stagnant or dip a little more based on the weaker buybacks and mediocre enthusiasm.

Your thoughts?

The conventional narrative around Berkshire Hathaway's underperformance tends to focus on what's not wrong (aka the investment portfolio): Apple is doing fine, the Chevron & Occidental stock positions are up since the Iran War, the Japanese trading houses (Itochu, Marubeni, Mitsubishi, Mitsui, Sumitomo) have been multi-baggers, and the equity portfolio broadly remains a compounding machine.

But fixating on the investment portfolio misses the point entirely. Berkshire is no longer primarily a struggling textiles company buying stocks in order to increase book value. It is, first and foremost, an operating conglomerate. The equity portfolio is the sideshow, unlike when Berkshire was taken over by Warren in the late 60s. The operating businesses are the main event. And the main event is underperforming. Full-year operating earnings for 2025 came in at $44.49 billion, down from $47.44 billion the year prior; a roughly 6% decline. That is what is moving the stock. Not the stock portfolio. As Warren & famed-investor Peter Lynch once said: 'a stock is a part ownership in an underlying business. If the business does well, the price takes care of itself'.

Insurance is Berkshire's largest operating profit driver, and 2025 was the year it began to buckle. Insurance underwriting earnings fell 19.5% year-over-year to $7.2 billion, with operating earnings dropping 29.8% in Q4 alone: the steepest single-quarter decline in years. (got these numbers from CNN)

GEICO is losing the retention war. GEICO is still structurally the low-cost provider in personal auto, maintaining an expense ratio advantage of 7–9 points over peers. But that advantage is now working against it in a cyclically softening market. Rate increases from 2022 through 2024 were necessary but came at the cost of customer retention, and competitors who cut rates are now pulling policyholders back. GEICO's expense ratio rose 2.7 points to 12.4% in 2025, driven by higher advertising and policy acquisition costs as the company spent to claw back lost ground. Compared to its main competitors State Farm, Progressive, and Allstate, which reported improvements in loss ratios ranging from 2 to nearly 10 points, GEICO's loss ratio worsened slightly.

Reinsurance - a pricing cycle turning against Berkshire. The reinsurance division faced compounding pressure. Group-wide insurance underwriting earnings included after-tax losses of roughly $850 million from the Los Angeles wildfires in Q1 2025, which hit both the primary insurance business and Berkshire Hathaway Reinsurance Group. Meanwhile, benign catastrophe seasons elsewhere invited capital back into the market. The reinsurance sector attracted significant increases in available capital from both traditional and alternative markets, leading to significant price declines in property reinsurance. And in casualty lines, claims inflation continued to outpace pricing: this combination means Berkshire, disciplined as ever, is choosing to write less business rather than chase volume at inadequate rates.

BNSF: Berkshire's railroad (the largest non-insurance business in its portfolio), BNSF, is the second major operating driver.

The railroad industry benchmarks efficiency via operating ratio (OR): the percentage of revenue consumed by operating costs. Lower is better. BNSF's 2025 operating ratio was 65.5%, sitting 5.7 behind Union Pacific's 59.8%, a gap that Greg Abel himself flagged in his annual letter. Each percentage point of margin improvement represents approximately $230 million of incremental operating cash flow. The gap to Union Pacific, therefore, represents well over $1 billion in annual earnings power currently being left on the table.

Union Pacific has maintained the industry's lowest operating ratio consistently, operating around the 60% threshold while BNSF continues to trail. BNSF showed a decline in return on invested capital in Q3 2025, while UP and FXE led the industry on that metric. Abel has acknowledged the gap is "too wide" and that closing it will require sustained efficiency and service improvements, but this is a multi-year operational challenge, not a quick fix.

That's why yesterday on a CNBC interview with Sue Decker (Lead Director of Berkshire Hathaway), she pointed out that Berkshire moving forward needs to focus on operations & the operating businesses in order to return capital to shareholders - that's where Greg comes in.

So stop hyper-fixating on the Apple shares & the lack of stock buys. It's the underlying business operations that needs attention. Buying stocks doesn't immediately 'fix' the amount of cash flow Berkshire generates.

Despite my activity on this sub, I haven't purchased any new shares of Berkshire since 2021.

Finally pulling the trigger today.

Inverse Reddit has never, ever, ever failed to make me a profit.

• Reddit shitting on Alphabet at $160 saying that search was doomed.

• Reddit shitting on Meta at $120 saying that Facebook is dead & Reality Labs is going to blow a hole through their cash & earnings.

• Reddit shitting on Netflix at $20 (adjusted for split) due to ONE quarter of no subscriber growth saying that the platform was doomed.

• And now, Reddit shitting on Berkshire.

Biggest buy signal I've ever seen.

Bullish!!

Greg Abel: was a bit shaky, fumbling around with words at times, not super well spoken. With no clearly communicated plan, I hope he is still as mentally sharp as when he built BHE. This is definitely a "show me" situation. Abel basically answered no real questions about cash, buybacks, etc. other than repeating the same "we won't rush into anything". I'm not losing sleep over it with him at the helm, but I'm definitely not sleeping as soundly as when Buffet was there right now - not even close.

Katie: Super well spoken, charismatic - very impressed, however, with BNSF consistently ranking 5/6 (in their own slide) on efficiency, there is no doubt BNSF has lagged peers in performance. OR is not the only way to measure performance, but it's big. They appear to be addressing OR now. Maybe previously she simply prioritized growth over OR. Regardless, I was pretty impressed with Katie.

Adam: Well spoken, charismatic, definitely did well with net jets (still remains CEO). Bit of a headscratcher how he's still CEO of net jets and the RMS division - Sounds like he should just do the RMS full time. No real concerns with him, think he'll do great.

Buybacks: What the hell was this? Why did Abel call up CNBC, go on TV, and specifically announce they did ~$225M buybacks only to stop immediately afterwards? I get that things can change, but even if the Iran oil crisis gave them new info, doing a complete U-Turn in 24 hours is incredibly short sighted. Honestly, how this was pitched, especially with the road show to announce it is a major red flag for me for Abel - especially since he made no effort to address it at the AGM. If anything he made it more confusing; mentioning the same old we buy when below intrinsic conservatively determined etc. - so why nothing when it was 465 if 486 was OK? Massive question marks on this whole thing - Why?

Buffet: The GOAT investor. Amazing insight, and one of the best teachers of all time. In his one off interview it's pretty clear his mental capacity is declining. The abrupt CEO transition makes sense last year. Relative to other 96 year olds, Warren is sharp as a tack, but in the investing game, it's not only 96 year olds. He will be missed.

Ajit: Like many of you, we noticed there is a clear neurological issue going on. I wish him the best. Regardless, mentally Ajit is 100% still there - he effortlessly explained the TOKIO deal. I hope he can hang around as long as he is able to as his leadership in insurance (especially during the current soft market) will be critical for the lower management teams. As mentioned the board as discussed contingency plans, but I hope they give the new team as much time with Ajit as possible to learn. Ajit is incredible.

I am hoping enough people panic sell for Berkshire to start meaningfully buying back their stock so my share of the company grows.

Please sell! it's going down! Expect -10% returns for the next decade.

I have an amazing idea:

• Sell all the Berkshire stock. The stock sucks and hasn't performed, right? We need to make up all the opportunity cost! The market's been on an amazing run!

• Since we think the market is gonna continue this amazing, non-overheated run - we should buy Long S&P 3X or Long NASDAQ 3X and make 3x the amount of money when the market keeps running up.

• Leave Berkshire in the dust while we make some good bank.

• We no longer have to give a f**k about Greg and buybacks and the $400B cash pile.

Having purchased BRK at various points over the last 12 months, I’ve now sold to reduce my allocation from about 14% of my portfolio to 9%. The BRK share price will no doubt come out of its current slump, but I no longer think it will keep up with the market. I still think it’s a good anchor, though, if there is a major market crash.

I sold at a loss, which psychologically was difficult to do, even more difficult than I thought it would be. I pushed myself to do it, though, as I felt it was a sound financial decision for me. I also did it to try to learn to become a better investor and to avoid being trapped in the sunk cost fallacy, where we try to convince ourselves that it must be worth X because that’s how much we paid for it

Friendly reminder to everyone upset that Berkshire's been hoarding cash while the market moons: you do realise nothing is stopping you from participating in this 'ripping market' using your brokerage account, right?

Where do you put that cash to work?

Where do you allocate the capital?

Curious to hear from the folks here.

EDIT: Reading these comments makes me even more confident in Berkshire's decision to hold cash.

The company is basically around a $1 trillion dollar company. Now they are sitting on almost $400b in short term treasuries and cash. The equity portfolio is nearly $300b. So, combined that represents 70% of the market cap. And yet, they spend 98% of the time talking about the operating companies. Does anyone else find this odd?

Yes, you can find periods of time during those 28 years when BRK outperformed. But try doing that in advance.

Seems like when the stock outperforms the s&p500, then that's all we hear. When it underperforms, like it has just slightly the past 5 years, then we hear things like you need to be patient.

What would you say is the appropriate benchmark and why?

A bit shaky, but overall okay. He didn’t really answer people’s questions. Since he joined Warren on stage, I was always more excited to hear from Greg because he actually talked about BRK and the businesses. Now that it’s time go get to know him, he didn’t really answer the more personable questions and give us a chance to get to know him apart from his repeated lines. Ajit offfered more insight and personality. Obviously the meeting is way less important than what Greg brings to the office everyday, but I’d expect attendance to be way down next year. I still trust Greg 100% but was just wishing for more character and less of his repeated lines.

Why do these clowns even show up to ask the same nonsense every year?

"Why don't you just sell all of your fossil fuel related businesses and switch to renewables??"

Maybe because the world's need for power isn't derived from your misguided moral code and doing so would cause massive harm to investors?

They need to put a minimum age on these things.

Yeah I sold cheap and bought high! But guess what I’m already winning something. It’s bad for my morale to see this going down for so long. Guess I’ll follow Warren buffet advice and just go for a low cost index (I got VOO not SPY) anyways… guessing my luck things are going to go the other way soon. Y’all are welcome!!!

With all this discussion of not buying back stock and the 'cash horde.' I was hoping to construct a basic understanding of if it is even plausible that Berkshire has had an above average success rate of investing in down markets. When I think of their major returns (for me that is Apple and General Re) they seem to be in upward trending markets with specific bets on companies.

Could someone with a better historical understanding of Berkshire tell me what major acquisitions have looked like during market drawdowns.

My basic understanding is as follows:

2022- Nothing

2020-Covid- Nothing

2009- Sold some S&P puts, bought BNSF, 5 BB into GS, (47BB->>27BB in cash).

2000- Looks like they bought some industrials and junk bonds but not. Looks like it amounts to 5BB on 35-40bb in cash

1987- Bought about 1bb in KO? 10-K I do not have a copy.

From this information it seems to me that they are marginal at best at deploying during downturns. Why have they gained such a reputation for being able to do that?