Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) shares faced several milestones in FY25.
Between accumulating a record US$348 billion cash pile and announcing that Warren Buffett would step down as CEO, it's been a big past 12 months for the company.
Of course, as a US-listed company (on the New York Stock Exchange), Berkshire's financial year is the calendar year. However, many Australian investors owning Berkshire shares are likely to measure its financial performance for the Australian financial year, along with their ASX-listed stocks.
Under Buffett's leadership, Berkshire Hathaway has compounded at nearly 20% for nearly six decades.
How did Berkshire's FY25 performance stack up next to that track record? Let's see.
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What drove Berkshire's return?
In FY25, Berkshire Hathaway shares rose 19.9%. That almost exactly matches Berkshire's long-term track record, despite several extraordinary events occurring.
As mentioned, shareholders have had a lot to process over the past 12 months.
Over the past few quarters, Berkshire Hathaway has been gradually selling down its equity portfolio and building a significant cash pile. Notable sales over the past 12 months have been Bank of America and Citigroup. Berkshire also materially reduced its position in its largest holding, Apple.
During the first quarter of this year, Berkshire's operating earnings declined 14% to US$9.6 billion. Meanwhile, the company generated $5 billion in investment losses for the quarter, compared to an increase of US$1.5 billion for the previous corresponding quarter.
Given the broader decline of the S&P 500 Index (SP: .INX) in the first 3 months of 2025, this was to be expected. Berkshire's large cash pile saved it from potentially significantly larger investment losses.
Since then, the S&P 500 Index has rebounded sharply. Last night, it reached a new all-time high of 6,215 points.
With Berkshire shares closing at US$485.77 last night, the investment conglomerate is still a little while off its all-time high of US$542.07, which was achieved in May.
However, Berkshire shares still outperformed the S&P 500 in FY25 by a wide margin, rising nearly 20% compared to 13% for the index.
Of course, the other significant piece of Berkshire Hathaway related news in FY25 was Buffett's retirement.
At Berkshire's recent annual meeting, Buffett announced that he intends to step down as CEO of the company at the end of the year. He also reaffirmed that long-time key management personnel Greg Abel would be his successor.
What might the next 12 months look like?
FY26 could shape up to be a big year for Berkshire Hathaway shares.
On 1 January 2026, Greg Abel will officially take over as CEO.
Buffett has previously described Abel as "a huge asset for Berkshire Hathaway."
Despite building a substantial cash pile, Buffett has regularly maintained his intention to maintain a large exposure to equity investments over the long term. Berkshire is waiting for the right opportunity to redeploy funds.
Abel is certainly coming in at an opportune time to make his mark and put that cash to work.
Will he be able to replicate Buffett's track record? And how might he do it? Only time will tell.
