Berkshire Hathaway sold $12.5 billion worth of stocks and bought only $6.4 billion in the latest quarter, marking its 12th consecutive quarter as a net seller. Buffett’s restraint extended to Berkshire’s own stock, with the company refraining from buybacks for a fifth straight quarter.
The cautious stance began in 2022, when the Federal Reserve launched its most aggressive rate-hiking campaign in four decades to curb inflation, in a tightening that crushed valuations but still failed to lure Buffett off the sidelines. Even as the Fed later pivoted to rate cuts and AI stocks drove the market to record highs, Berkshire stayed on the defensive.
Cash towering to the heavens
As Berkshire’s stock portfolio has shrunk, its cash pile has soared. The company’s cash and equivalents surged to $382 billion at the end of September, while operating earnings jumped 34% to $13.5 billion, led by a near-tripling in insurance underwriting profit to $2.4 billion.
At the same time, Berkshire’s net investment income slipped 13% to $3.2 billion as short-term interest rates fell. Much of its cash has flowed into U.S. Treasurys, a haven that reflects Buffett’s patience and his scepticism toward lofty market valuations.
The buildup reflects Buffett’s trademark discipline: buying only when bargains appear. But with stocks near record highs, private equity firms bidding up acquisitions, and even Berkshire shares still elevated despite recent declines, few opportunities fit his price tag.
A twilight deal
Still, Buffett found room for one last swing. In October, Berkshire agreed to acquire Occidental Petroleum’s chemicals unit, OxyChem, for $9.7 billion, in its biggest deal since purchasing insurer Alleghany in 2022. The move deepens Berkshire’s nearly 30% stake in Occidental and could mark the final major deal of Buffett’s storied career.
The October 2 announcement quoted Greg Abel, and not Buffett, signalling the quiet transition already underway at the top of Berkshire.
A tricky exit
Buffett’s decision in May to step down as CEO after nearly six decades sent shockwaves through Wall Street. Berkshire’s Class B shares, which had hit a record $540 before the announcement, have since fallen 12%, while the S&P 500 has climbed 20% to fresh highs.
Buffett transformed Berkshire from a struggling textile mill he acquired in 1965 into a $1 trillion conglomerate spanning insurance, railroads, utilities, and consumer brands, while amassing major stakes in Coca-Cola and American Express.
As Abel prepares to take over in January, Buffett will remain chairman, but his successor will inherit a company sitting on a mountain of cash, a cautious investment posture, and expectations shaped by six decades of extraordinary returns.
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