Berkshire Hathaway’s third-quarter working revenue soared 34% to $13.485 billion, and its money holdings soared to a file $381.6 billion.
The corporate’s earnings report stated this vital bounce in earnings was attributable to a greater than 200% bounce in underwriting income, which totaled $2.37 billion.
However whereas money is piling up, Warren Buffett refuses to faucet into it. Not a single share was repurchased within the first 9 months of 2025, at the same time as inventory costs fell.
Traders have been anticipating share buybacks. As a substitute they acquired silence.
Berkshire’s efficiency has slowed, with Class A and B shares up 5% because the starting of the yr, whereas the S&P 500 is up 16.3%. The corporate bought its shares web within the third quarter, taking in $10.4 billion in taxable earnings in alternate for raking within the inventory.
This transfer is a transparent sign that Warren would not see the worth in it. This sort of vigilance solely raises eyebrows. Particularly now that Berkshire is sitting on a pile of money bigger than some international locations’ GDPs and refuses to spend it.
Buffett’s departure causes decline as Abel prepares to take over
Warren, who is sort of 96 years outdated, introduced in Could that he would step down as CEO on the finish of 2025 after greater than 60 years on the helm.
He stays chairman, however Greg Abel, vice chairman in command of non-insurance companies, will grow to be the corporate’s subsequent CEO. Gregg will start writing letters to the corporate’s shareholders beginning in 2026.
This transformation of guard brought about the inventory to slide. On Could 2, simply earlier than Warren’s annual assembly announcement, Berkshire’s B shares hit an all-time excessive, closing at slightly below $540.
At that time, they outperformed the S&P 500 by 22.4 proportion factors. Nevertheless, B shares fell 11.5% following the CEO’s bombshell remarks. That is nonetheless above the August low, when the inventory fell about 15%, however far behind its closing excessive of $507 on Sept. 4.
The underperformance hole with the S&P narrowed barely to 10.9 factors as of Friday from a 12.2 level hole midweek, the biggest hole to date this yr.
Wall Avenue’s response was not optimistic. On October 26, Keefe, Bruyette & Woods analysts Meyer Shields and Jing Li downgraded Berkshire’s Class A shares to “underperform” and lowered their worth goal from $740,000 to $700,000.
The inventory ended the week at $715,740. Their report is “A number of issues are going within the fallacious path.” He pointed to a protracted listing of issues.
They warned of GEICO’s underwriting margins doubtless peaking, falling disaster reinsurance costs, falling short-term rates of interest, tariff-related points hitting railroads, and the approaching lack of various vitality tax credit.
They are saying all of that is anticipated to mix to weigh on efficiency subsequent yr. They stated the corporate’s lagging efficiency in comparison with its friends was “largely” the results of Warren’s choice to step down.
Berkshire avoids expectations, new administration poses belief points
Traders are involved about what they name Berkshire’s “distinctive succession danger.” The corporate doesn’t comply with regular company technique. We don’t publish predictions. No analyst questions required.
Individuals tolerated it as a result of Warren was main the present. Mr. Shields and Mr. Lee wrote that “Mr. Buffett’s maybe unparalleled status and what we see as an unlucky lack of disclosure” may flip traders away if he ceases to be an on a regular basis determine.
There’s additionally the erosion of the so-called “Buffett premium,” the added worth that merchants place on Berkshire just because Warren is on the prime. The Wall Avenue Journal captured this alteration and quoted Shields as saying:
“There are individuals who have large religion in Warren Buffett. For them, that is the place their funding thesis begins and ends.”
However not everybody agrees with the panic. Chris Blomstran, president of Semper Augustus Funding Group, stated Berkshire is pricey heading into the Could assembly anyway. He famous that the inventory remains to be up greater than 5% in 2025, whereas GEICO’s predominant rival, Progressive, is down 14%.
Chris continues to purchase and believes Warren’s departure shouldn’t be the explanation for the decline. “Everybody I do know within the Berkshire world has nothing however reward and good issues to say about Greg,” he informed the Journal.
Henry Asher of Northstar Group agrees, saying he would not assume Gregg must match Warren’s stock-picking file for Berkshire to stay worthwhile. “We’re not going to cancel Burlington Northern shipments as a result of Buffett is not there. Firms will proceed to generate enormous money flows with or with out Buffett.”
The Oxychem deal is the largest transfer since Alleghany.
Though Berkshire distanced itself from inventory buybacks and the broader inventory market, it nonetheless made one main acquisition.
In October, the corporate agreed to purchase Occidental Petroleum’s petrochemical division, Oxychem, for $9.7 billion in money. That is Berkshire’s largest deal since 2022, when it acquired Alleghany for $11.6 billion.
The transfer would not change the truth that Warren has been out of the marketplace for most of 2025, swelling the corporate’s money to file highs.
Berkshire’s complete third-quarter earnings, which embrace working earnings of $13.485 billion and positive factors from public inventory possession, rose 17% to $30.8 billion.
This could considerably enhance this yr’s complete, regardless of falling inventory costs and analyst issues.
