Berkshire cash hits record as earnings rise, signaling caution ahead of Buffett’s exit
Berkshire cash hits record as earnings rise, signaling caution ahead of Buffett’s exit
By Reuters | Published: 2025-11-02 17:20:00 | Source: Inc.com
Berkshire Hathaway noted on Saturday that it remained cautious about markets, allowing cash to swell to a record $381.7 billion even as profits rose, in its final financial report before Warren Buffett stepped down as CEO.
For the twelfth consecutive quarter, the Buffett Group sold more shares than it bought for its $283.2 billion stock portfolio, whose holdings include Apple and American Express.
Berkshire also did not buy back any of its shares, marking the fifth straight quarter without buybacks, although its stock price has significantly lagged the broader market.
Lower insurance losses helped boost third-quarter operating profits by 34 percent to $13.49 billion, beating analysts’ expectations, while net income grew 17 percent to $30.8 billion.
But revenues grew only 2 percent, a slower rate than the overall US economy.
Berkshire said economic uncertainty and declining consumer confidence were headwinds, stalling sales growth at homebuilder Clayton Homes and reducing revenue from Duracell batteries, Fruit of the Loom apparel, and Jazwares toy maker Squishmallow.
“Berkshire, often considered a microcosm of the U.S. economy, is not keeping up,” said Cathy Seifert, a CFRA research analyst with credit ratings on Berkshire stock. “Investors will have a hard time finding a catalyst for this stock.”
Buffett prepares to resign, Abel to take over
Buffett, 95, is allowing the money to accumulate as he prepares to end his six-decade tenure as CEO at the end of the year.
He will succeed Vice Chairman Greg Appel, 63, the legendary investor, although Buffett will remain chairman.
Abel is known as a more hands-on manager than Buffett.
It is unclear what he will do with the Omaha, Nebraska-based Berkshire’s money, with options likely to include paying the conglomerate’s first $1.03 trillion dividend since 1967.
Berkshire plans to use $9.7 billion in cash to buy Occidental Petroleum’s OxyChem chemicals business, a deal announced on October 2.
James Shanahan, the Edward Jones analyst who raised Berkshire’s rating to “buy” in September, said the company’s resistance to spending more money during this year’s market rally has been disappointing.
“If you feel like stocks are expensive, including your own, you’ll eventually be right, but you can be wrong for a long time, and that’s what happened here,” he said.
Higher net income supported by stock gains
Quarterly operating earnings of $13.49 billion, or about $9,376 per Class A share, were up from $10.09 billion a year earlier. Currency fluctuations accounted for more than two-fifths of this increase.
The results partly benefited from the absence of major disasters such as hurricanes.
But auto insurer Geico posted smaller gains because it spent more, perhaps on advertising, to acquire new policies.
Insurance will likely face headwinds as lower interest rates reduce income from Berkshire’s cash holdings, which also happened in the third quarter.
BNSF Railway Co. boosted its earnings by 6%, citing lower fuel costs and “improved employee productivity.”
Meanwhile, energy company Berkshire Hathaway’s 9 percent drop in profits reflects legal bills caused by bushfires, higher costs for natural gas pipelines and Britain’s Northern Powergrid.
Berkshire is still evaluating how US President Donald Trump’s law, which he signed in July, may affect the viability of its renewable energy projects.
Net income of $30.8 billion, or $21,413 per Class A share, was up from $26.25 billion a year earlier.
The net results include gains and losses in stocks that Berkshire does not sell. This increases volatility, and Buffett believes such results are useless in understanding his company.
The stock price lags the broader market
Investors have voiced their concerns about Berkshire’s outlook and pending management change by selling its shares.
Since Buffett announced on May 3 that he would step down, Berkshire’s stock price has fallen 12%, lagging the S&P 500 by 32 percentage points.
For all of 2025, Berkshire trails the index by 11 percentage points.
“Impatient investors, feeling the urgency for Berkshire to distribute their money, have cast their nets elsewhere,” said Tom Russo, a partner at Gardner Russo & Cowen in Lancaster, Pennsylvania, which has $10 billion in investments.
Russo has owned Berkshire shares since 1982 and said Berkshire remains “very well positioned” over the long term.
“Berkshire will not deploy capital that will not increase intrinsic value on a per-share basis,” he said. “Knowing that Berkshire guides means investors won’t have to guess.”
The group owns nearly 200 companies that also include chemical and industrial companies and familiar consumer brands such as Dairy Queen and See’s Candies.
It has not made a major acquisition since paying $32.1 billion for aerospace parts maker Precision Castparts in 2016.
“Abel has a tremendous opportunity,” Shanahan said. “He has plenty of cash on hand and is by all accounts an excellent operator, so he may want to deploy capital into Berkshire’s operating companies to improve their performance.”
(Reporting by Jonathan Stempel in New York – Prepared by Muhammad for the Arab Bulletin) Editing by Alden Bentley, Joe Bavier and Franklin Paul
(Tags for translation)Berkshire Hathaway
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