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Berkshire's Unprecedented $381.7B Cash Reserve Faces Leadership Transition and Analyst Skepticism

Berkshire's Unprecedented $381.7B Cash Reserve Faces Leadership Transition and Analyst Skepticism

Bitget-RWA2025/11/01 14:16
By: Bitget-RWA

Berkshire Hathaway Inc. reached an all-time high in cash holdings, amassing $381.7 billion by the third quarter, as revealed in late October filings. This achievement marks a notable point for Warren Buffett’s conglomerate as it adapts to changing economic conditions

. Despite Buffett selling $6.1 billion in shares during the quarter, the company’s cash reserves continued to grow, highlighting its ability to remain agile amid minimal disaster losses and strong insurance underwriting results. Operating profits soared 34% to $13.5 billion, mainly due to robust performance in insurance and reinsurance, though net investment income fell 13% to $3.2 billion as short-term interest rates declined.

Berkshire's Unprecedented $381.7B Cash Reserve Faces Leadership Transition and Analyst Skepticism image 0

Berkshire’s insurance division, a key part of its business, returned to pretax underwriting profits after losses in the same period last year. This improvement was largely due to a mild hurricane season, which resulted in fewer catastrophic claims compared to the prior year’s heavy losses from Hurricane Helene, according to

. However, Geico, the group’s auto insurance arm, saw pretax underwriting profits drop by 13% because of increased claims, even as it continued to attract new customers, as Fortune reported. The overall insurance operations, including GEICO and reinsurance, helped boost operating earnings, reflecting careful risk management and favorable market trends.

Buffett, who is set to retire as CEO by the end of the year, has continued to take a conservative stance on spending capital. For the fifth straight quarter, Berkshire refrained from buying back its own shares, even though the stock price fell nearly 12% after he announced his succession plan in May. The company’s record cash position has been both commended for its prudence and questioned for possibly not being put to better use. Analysts pointed out that even a significant $9.7 billion investment in OxyChem in September barely made a dent in the cash total.

The strong quarterly results come in contrast to a recent downgrade by Keefe, Bruyette & Woods (KBW), which lowered Berkshire’s rating to “underperform” due to concerns about its future growth, according to

. Analyst Meyer Shields cited issues such as shrinking profit margins at Geico, risks from U.S.-China trade tensions affecting the BNSF railroad, and the upcoming leadership change. In Shields wrote that “Buffett’s exit and declining interest income from cash reserves could dampen investor sentiment,” and he reduced his price target for Class A shares from $740,000 to $700,000. The downgrade followed a period where Berkshire’s stock trailed the S&P 500 by more than 28 percentage points since Buffett’s succession announcement in May, as reported by .

Berkshire’s recent performance has also caught the eye of major investors. The Bill & Melinda Gates Foundation, which owns $11.7 billion worth of Berkshire shares, is under Senate investigation for allegedly granting $23 million to China-related projects, according to

. Although this probe is unrelated to Berkshire’s main business, it highlights the foundation’s significant influence in the market and its alignment with Buffett’s investment approach.

Looking forward, how Berkshire puts its cash to work will be crucial. The company’s wide-ranging businesses—from railroads and utilities to manufacturing—offer a window into the health of the U.S. economy, as noted by Fortune. However, with interest rates falling and global trade patterns shifting, Buffett’s successors will need to uphold the company’s tradition of careful capital management. The upcoming third-quarter results, due November 1, are expected to shed more light on Berkshire’s future direction.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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