Berkshire Hathaway (BRK.B) Doubles Buybacks as Profit Slips and Stock Hits Highs

Berkshire Hathaway's third-quarter profit went the wrong way, and the stock barely cared. Operating earnings fell 5.8% to $12.705 billion, yet shares are near record highs as investors run from the AI trade.

The real headline for shareholders is what CEO Greg Abel did with the company's cash. Berkshire repurchased $9.6 billion of its own stock in the quarter, according to CNBC. That's more than double the $4.5 billion bought in the second quarter and lifts 2026 buybacks to about $14.4 billion.

Reuters, via the New York Post, added that Berkshire bought roughly $2 billion more in October. Abel has shown a much bigger appetite than Warren Buffett for putting the cash hoard to work.

The earnings side was mixed. Insurance underwriting profit tumbled 43% to $1.352 billion, and insurance investment income dropped 14%. Overall net earnings fell 28% to $22.112 billion as investment gains shrank by nearly half.

Geico was the soft spot. Its pretax profit fell 45% as it cut premiums to win back customers, and its loss ratio rose to 76.6% from 71.5% a year earlier. Reuters noted Geico's results lagged Allstate and Progressive.

Elsewhere the picture was healthier. BNSF profit rose 19% on fuel surcharges and higher volumes. Berkshire Hathaway Energy gained 8%, and Precision Castparts lifted pretax profit 30% on aerospace and turbine sales. Revenue climbed 11% to $105.65 billion.

"The question is how much investors will accept short-term shortfalls in exchange for owning a company with a strong balance sheet and which successfully transitioned to a post-Buffett era." — Cathy Seifert, Analyst, CFRA Research

That question explains the stock's run. Fortune reported Berkshire's Class B shares are up 13.6% this year against 7.8% for the S&P 500, and up 14% since Oct. 1 while the index fell about 4%.

In other words, money is rotating out of AI-heavy tech and into something steadier. Berkshire owns railroads, utilities, insurers and a stock portfolio of Alphabet, Apple, American Express, Bank of America and Coca-Cola, the same top five as last quarter.

Here's the trade-off to think through. Buybacks at a record-high price are only smart if the shares are still worth more than what Berkshire is paying. Abel's repurchases are a vote of confidence, but they're not a free lunch for new buyers chasing the stock after a 14% month.

The cash pile deserves a careful read too. CNBC put the headline figure at $377.4 billion, up 3% from the second quarter, but $352.3 billion excluding rail and utility cash and T-bill payables. Reuters cited $356.9 billion in cash and equivalents. Definitions differ; the direction, down as buybacks and deals absorb cash, is what matters.

Berkshire also keeps expanding outside the stock market. This year it bought Occidental's chemicals business for $9.4 billion and agreed to buy homebuilder Taylor Morrison for $6.8 billion, ending a long drought in big deals under Buffett.

Risks are real. Berkshire warned of "considerable uncertainty" around tariffs and wars, and said several retail businesses are seeing "sluggish" demand. Seifert also flagged Berkshire's thin disclosures, which she called a vulnerability when results turn.

For investors, the practical takeaways are straightforward. If you already own Berkshire as a defensive anchor, this quarter doesn't break the thesis. If you don't, resist buying on momentum alone and consider scaling in over several weeks rather than all at once.

Watch Geico's loss ratio, the pace of October-onward buybacks, and Berkshire's detailed 13F filing later this month, which will show exactly what Abel bought and sold in the stock portfolio.

Bottom line: Berkshire earned less this quarter, but it's buying more of itself, and in a market rattled by AI, that's exactly what investors want to hear.