How I Made $5000 in the Stock Market

Warren Buffett Is Leaving Berkshire Hathaway in Great Shape for His Successor After Profit Results

Nov 02, 2025 02:10:00 -0500 by Andrew Bary | #Warren Buffett

Warren Buffett in 2019. (JOHANNES eISELE/AFP via Getty Images)

Key Points

Warren Buffett will be leaving on a high note.

Berkshire Hathaway reported strong third-quarter earnings results on Saturday and its enormous cash holdings hit record levels.

This will give Greg Abel, the Berkshire executive who will succeed the 95-year-old Buffett as CEO at year-end, a good foundation to begin his tenure as leader of the world’s biggest conglomerate with a $1 trillion market value.

Berkshire’s operating earnings after taxes rose 33% year-over-year in the third quarter to $13.5 billion and cash and equivalent holdings hit $381 billion at quarter end, up from $344 billion in the quarter ended June 30.

Those figures, however, weren’t quite as impressive as they looked.

Strip out currency-related profit swings, and Berkshire’s operating earnings rose 17% from a year ago to $13.2 billion, while per-share profits topped the consensus estimate by about 7%. There also was a timing issue with over $20 billion of Treasury bill purchases. Adjust for that and cash levels stood at about $359 billion—giving Abel plenty of wherewithal for investments and potential acquisitions.

“The results overall were good and insurance was strong,” says Jim Shanahan, an Edward Jones analyst.

Investors may be disappointed that Berkshire didn’t buy back any stock in the third quarter, continuing a trend dating back to May 2024. Buffett apparently doesn’t view the stock as sufficiently cheap to buy, despite a 10%-plus drop in the shares since they peaked right before the annual meeting on May 3 when Buffett said he would step down as CEO at year-end while remaining chairman of the board.

Berkshire’s buyback drought continued into October with the company repurchasing no shares from Sept. 30 until Oct. 20, the date of the third-quarter 10-Q report, Barron’s estimates, based on share count information in the Berkshire 10-Q. Berkshire’s share count is about 1.438 million A shares with B stock converted into an equivalent amount of the A shares.

The shares have lagged the S&P 500 by over 30 percentage points since the meeting on May 3—one of the worst stretches during Buffett’s 60-year tenure as CEO.

Berkshire A stock finished Friday at $715,740 and the B shares at $477.54, both up 5% so far this year and about 13 percentage points behind the S&P 500 index.

Berkshire stock now trades for a more reasonable 1.5 times book value, down from 1.8 times at the May high.

Insurance underwriting profits were strong in the third quarter as the company benefited from continued outsize margins at auto insurer Geico and the lack of major U.S. hurricanes in the period. Profits at Berkshire’s railroad business, BNSF, were up 5% from a year ago.

Meanwhile on the negative side, investment income fell 13% due to lower short-term interest rates and profits were off 9% at Berkshire Hathaway Energy, the big utility business.

BHE has benefited significantly from federal tax credits for wind energy and it has one of the largest wind portfolios in the country. However, the One Big Beautiful Bill passed earlier this year curtails those credits and that could negatively affect results, the company said.

“We are currently evaluating the potential implications of the OBBBA on BHE’s financial results and capital expenditures related to renewable energy, storage and technology neutral projects, including the potential impact on the economics and viability of such projects,” Berkshire said in its 10-Q that came out Saturday in conjunction with the quarterly earnings.

There was some weakness in Berkshire’s consumer businesses; Pilot, the truck stop operator, had a surprise loss of $17 million in the third quarter against profits of $217 million in the year-earlier period. Berkshire paid about $13 billion for that business.

There also were some clues that Berkshire pared its stake in Apple stock in the third quarter. Barron’s estimates that Berkshire may have sold about 30 million shares in the period, dropping its stake to 250 million shares that would be worth $67 billion. Berkshire will disclose its Apple stake and the rest of the holdings in its roughly $300 billion equity portfolio in mid November.

Buffett and his investment managers Todd Combs and Ted Weschler continued to find little to buy in the stock market in the third quarter. Net stock sales—meaning sales less buys—were about $6 billion in the quarter and $10 billion for the year.  There were just $6.4 billion of buys in the latest quarter.

“It’s disappointing that Buffett continues to be on the sidelines. He missed the stock market rally while hoarding cash,” Shanahan says. Berkshire, however, did agree to pay nearly $10 billion for Occidental Petroleum’s chemical business in October in what looks like an attractive deal.

What about Berkshire stock?

Shanahan is bullish, having upgraded the stock to Buy from Hold in September and putting it on Edward Jones’s Focus list.

The stock has come down in the past six months as the Buffett premium has eroded—and as investors worry that insurance profitability is set to drop, as well as investment income in 2026.

A key issue will be Abel, his leadership skills, and how well he can fill Buffett’s enormous shoes. Shanahan is optimistic.

“There is a good chance that Abel will demonstrate strength as operator,” Shanahan says. “I like the stock’s defensive characteristics as well.”

Write to Andrew Bary at andrew.bary@barrons.com