Warren Buffett told new CEO Greg Abel that “once you start deceiving your shareholders, you’ll soon start believing your own baloney.” What did Abel tell shareholders about Q4?

In his first annual shareholder letter, published on February 28, 2026, Greg Abel calmed the nerves of Berkshire Hathaway ( BRK.A ) ( BRK.B ) investors by recommitting to the values ​​that held the company under the leadership of legendary investor Warren Buffett. Buffett has always been remarkably upfront about his mistakes and open with his investors, a trait that has defined the company’s culture for 60 years. By emphasizing this principle in its first annual message, Abel shareholders feel confident that this transparency will continue even with the change of guard.

One of the most important lessons that Abel carries forward is Buffett’s warning from 2024: “Once you start fooling your partners, you’ll soon believe your own bullshit.” Buffett deals in full transparency and treats shareholders as true shareholders, and Abel’s first letter makes it clear that he intends to follow the same blueprint. While Abel acknowledged that simple math means he won’t be CEO for the next 60 years, he made clear his intention that two decades from now, the company will be stronger for the next generation of owners.

When discussing hard numbers for the fourth quarter and full year 2025, Abel stuck to Berkshire’s traditional preference for “operating income” over GAAP net income, which can be distorted by market fluctuations.

Berkshire projected operating income of $44.5 billion by 2025. While this was down from the reported $47.4 billion in 2024, it remained healthy above the five-year average of $37.5 billion. Abel noted that the company generated $46 billion in net cash flow from operating activities, further underscoring the underlying business.

The heart of Berkshire remains the insurance operation, which sees an outstanding combined ratio of 87.1% in 2025. This was significantly better than the company’s ten-year average of 93.0%. GEICO was a major contributor to that success, restoring its margins through price increases, though Abel cautioned that this came at the cost of lower customer retention. Looking ahead to 2026, Abel warned of potential disruptions as more capital enters the insurance market, likely as companies write less property and casualty business to maintain underwriting discipline.

In the non-insurance sectors, BNSF and Berkshire Hathaway Energy (BHE) showed steady cash flow but also areas for improvement. BNSF’s operating margin improved to 34.5%, yet Abel was honest in that the gap between BNSF and the industry’s best is wide. On the energy side, BHE generated $8.4 billion in operating cash flow while navigating the growing demand for AI computing and the increased risk of wildfires in the western United States.

Abel also pointed to Berkshire’s astonishing financial strength, noting that cash and U.S. Treasury holdings now exceed $370 billion. This large “dry powder” ensures that the company remains a “fortress” and is ready to make decisions when others fear. Whether it’s handling concentrated equity management at major companies like Apple ( AAPL ) and American Express ( AXP ) or overseeing its 51 non-insurance businesses, Abel’s message has been consistent: The operating framework and commitment to partner partnerships remain unchanged.

As of the date of publication, Oscar Serpel had no positions (either directly or indirectly) in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com