Buffett's 6 Million Percent Legacy Celebrated
Warren Buffett's Berkshire Hathaway gained 6,099,294% since 1965 with 19.7% annualized returns, vastly outpacing the S&P 500's 46,061% gain over the same period. The viral post highlighting this performance garnered 292 likes as investors reflect on the power of long-term compounding. Investment discussions emphasize scenario-based portfolio allocation over simple diversification—growth assets for expansion, gold for inflation, bonds for recession, cash for crises.
With Warren Buffett’s successor, Greg Abel, now at the helm, Berkshire Hathaway is navigating a new era. In his first annual letter, Abel reassured shareholders that the conglomerate will adhere to the foundational "framework" built by Buffett and Charlie Munger, emphasizing a decentralized business model and disciplined capital allocation. For the full year of 2025, Berkshire reported operating earnings of $44.5 billion, a decrease from $47.4 billion in 2024, but still above the five-year average. The company's net earnings for 2025 were $67.0 billion, a significant drop from the previous year, largely impacted by an $8.3 billion impairment charge related to its investments in Kraft Heinz and Occidental Petroleum. The company's massive cash pile grew to a near-record $373.3 billion at the end of 2025. Abel has signaled that this significant liquidity is a strategic asset, providing "dry powder" to act decisively during market turbulence. Analysts are closely watching how Abel will deploy this capital, with some speculating on the possibility of a dividend, a departure from Buffett's long-standing policy. In early 2026, Berkshire Hathaway completed its $9.7 billion acquisition of OxyChem, the chemical division of Occidental Petroleum. This move adds a major producer of chemicals like polyvinyl chloride (PVC) and chlor-alkali to Berkshire's diverse portfolio of businesses. Berkshire's insurance underwriting segment, a key profit driver, saw a significant decline in the fourth quarter of 2025, with operating earnings dropping by over 54% year-over-year. In his letter, Abel noted that increased competition and lower pricing in the property and casualty insurance market will likely lead to writing less business in this sector for a period. On the other hand, the BNSF railroad and Berkshire Hathaway Energy (BHE) segments showed strong performance in 2025. BNSF's operating earnings grew by approximately 9% to $5.5 billion, while the energy unit's earnings rose by about 7% to $4.0 billion. The company's equity portfolio remains heavily concentrated, with top holdings in Apple, American Express, Bank of America, Coca-Cola, and Chevron. In the final quarter of 2025, Berkshire continued to trim its stake in Apple while increasing its investment in Chevron. Looking forward, Abel has emphasized a focus on investing in easily understandable businesses with strong management and high barriers to entry. He also stressed the importance of improving operating margins at BNSF and is assessing opportunities for Berkshire Hathaway Energy to meet the growing energy demands from AI and data centers, provided it adds shareholder value.
