Berkshire Hathaway (BRK.A) Records Longest Losing Streak Since 2018 Under New CEO Abel

Q4 2025 operating earnings were $10.2B, down ~30% YoY; insurance underwriting plunged 54% YoY to $1.56B. Berkshire shares have fallen eight straight sessions (longest streak since Dec 2018), with Class A down 4.7% and Class B down 4.9% since March 17 and the stock off >13% since Buffett’s CEO step-down announcement. New CEO Greg Abel restarted buybacks on March 4 and bought $15.3M personally; Berkshire ended 2025 with $373.3B in cash and National Indemnity paid $1.8B for ~2.5% of Tokio Marine, which surged ~24% to be worth roughly $2.3B.

Analysis

Berkshire’s balance sheet and breadth of operating exposures create asymmetric strategic optionality: management can shift capital across insurance, public-equity stakes, and operating businesses in ways that are difficult for single-industry peers to replicate. That optionality acts as a valuation floor — not because current results matter day-to-day, but because it compresses the probability of a permanent capital impairment versus peers concentrated in underwriting or freight cycles.

Market moves since the leadership change have amplified liquidity and governance narratives that typically resolve over medium-term horizons rather than weeks; the most meaningful reversals will come from normalization in the insurance pricing/claims cycle, a reversion in macro-cost tailwinds for industrial operations, or demonstrable M&A that meaningfully redeploys cash. Tail risks include an outsized underwriting shock, a sustained global energy price shock that depresses discretionary demand, or activist pressure that forces suboptimal capital deployment; those play out on 3–24 month horizons.

Given the current environment, the better trade is to express a view on optionality and governance rather than near-term earnings noise. Positioning should favor limited-cost structures that monetize any re-rating while protecting capital if adverse news continues. Relative-value trades that capture a widening discount to multi-year intrinsic value are preferable to naked long exposure to headline volatility.

Key Decisions for Investors

• Long BRK.B 12-month call spread (buy 12-month ATM call, sell 12-month OTM call ~20-25% higher) — entry on a 3-5% further downside to stock; objective: capture re-rating from optionality and buyback/governance credibility; max loss = premium paid, target 2.5-3x return if sentiment normalizes in 6–12 months.
• Pair trade: long BRK.B vs short AIG (equal notional, 6–12 month horizon) — rationale: capture relative re-rating from diversified cash deployment optionality versus pure-play insurer exposure; stop-loss at 8% on either leg, target 15–25% relative outperformance.
• Long protective-put on a small rail/heavy-industrial exposure (e.g., UNP or CSX) while holding covered exposure to industrial suppliers — 3–6 month puts to hedge a deeper macro slowdown scenario; cost funded by selling short-dated calls against less volatile positions to keep net premium <2% of portfolio.
• Event trigger plan: if energy/backstop macro indicators improve materially (diesel/freight cost proxies down 15%+ and credit spreads tighten), add to BRK.B outright long for 6–18 months — position size scaled to conviction and trimmed on a 20–30% price recovery.