Warren Buffett's Berkshire Hathaway recently reported a remarkable resurgence in its operating profit, reflecting the company's robust performance across its diverse portfolio. On Saturday, it was announced that Berkshire's operating profit, stemming from its fully owned businesses such as insurance and railroads, soared by an impressive 34% year over year, reaching $13.485 billion in the third quarter.
The significant gains were primarily fueled by an extraordinary increase in insurance underwriting income, which surged over 200% to $2.37 billion. This demonstrates the strength of Berkshire's insurance operations, a cornerstone of its business model. In a surprising move, Buffett chose not to execute any share buybacks despite experiencing a notable decline in the stock price. The company confirmed that there were zero share buybacks during the first nine months of 2025.
In 2025, both Class A and Class B shares of Berkshire Hathaway have risen by 5%, although this growth pales in comparison to the S&P 500's overall increase of 16.3%. The absence of share buybacks has contributed to an expansion of Berkshire's cash reserves, which have reached a record-breaking $381.6 billion. This figure surpasses the previous high of $347.7 billion achieved in the first quarter of the year.
Additionally, Berkshire Hathaway’s investment strategy appears to have shifted, as the company reported net sales of equities in the third quarter, resulting in a taxable gain of $10.4 billion. This strategic decision reflects Buffett's cautious stance on the current market, indicating that he found other stocks unattractive for investment opportunities.
As Berkshire Hathaway prepares for a transitional period, the 95-year-old Buffett has announced his intention to step down as CEO at the end of the year after an impressive six-decade tenure. Greg Abel, the company’s vice chairman of non-insurance operations, is set to take over as chief executive. Despite this change, Buffett will continue to serve as the chairman of the board, and Abel is expected to begin writing annual letters starting in 2026.
The announcement of Buffett's retirement has led to a significant sell-off in Berkshire's shares, which have fallen by double digits from their all-time highs. This decline can be attributed, in part, to the Buffett premium—the additional price investors are willing to pay for shares due to Buffett's exceptional track record and unparalleled capital allocation skills.
In a recent strategic move, Berkshire Hathaway announced its acquisition of Occidental Petroleum's petrochemical unit, OxyChem, for $9.7 billion in cash. This marks Berkshire's largest acquisition since 2022 when it purchased the insurer Alleghany for $11.6 billion. Overall, Berkshire's earnings, which encompass gains from its investments in publicly traded companies, experienced a year-over-year increase of 17%, totaling $30.8 billion.
