Warren Buffett's Legacy at Berkshire Hathaway
Warren Buffett is no longer the steering force behind Berkshire Hathaway, yet his influence persists. His conglomerate recently disclosed its third-quarter earnings, revealing minimal stock transactions, a pattern consistent with his later years in charge. During a period of historic stock market growth, Buffett faced challenges in identifying lucrative deals.
He stepped down as CEO at the end of 2025 and as chairman in September of the same year. Under the new leadership of Greg Abel, Berkshire's stock buying and selling patterns have shifted. While the second quarter witnessed a significant net stock purchase of $20 billion, the third quarter saw a reversal with a net sale of $2.8 billion, after buying $2.4 billion.
Berkshire's cash reserves, once $357 billion, have decreased to around $277 billion after subtracting Treasury payables. Despite this decline, the pile has more than doubled since the end of 2023, reflecting Buffett's persistent search for value.
One notable change under Abel, in consultation with Buffett, has been the acceleration of stock buybacks. In the third quarter, Berkshire repurchased $9.6 billion of its own stock, marking a significant period of buybacks. This strategy has proven successful, as Berkshire Hathaway stock has surged from below $500 at the end of September to a record high above $570.
David Kass, a finance professor at the University of Maryland and Berkshire analyst, described this increase in buybacks as a "pleasant surprise." He attributes Abel's decision to be both a net seller of stocks and to ramp up buybacks to "caution with respect to current market valuations other than Berkshire's."
Berkshire's operating income reported $12.7 billion, a 6% decrease from the same quarter last year. This decline can be attributed to lower insurance underwriting and investment income. However, profits from BNSF Railway, Berkshire Hathaway Energy, and manufacturing, service, and retailing businesses offset these losses.
Berkshire's diverse portfolio includes Geico, See's Candies, Duracell, and significant stakes in public companies like Apple, Coca-Cola, and American Express. Shareholders will gain insights into the company's recent investments when it files its third-quarter portfolio disclosure next week.
Abel's approach, while closely following Buffett's methods, demonstrates a prudent leadership style, adhering to the adage, "If it ain't broke, don't fix it."