Berkshire's Record Cash Pile Faces Scrutiny as Gates Stake Probed and Analysts Downgrade

Berkshire Hathaway Inc.'s cash reserve has surged to a record $381.67 billion, according to a third-quarter report, marking a significant milestone for the conglomerate led by Warren Buffett. The company's operating earnings for the period rose 33.6% year-over-year to $13.49 billion, according to the report, driven by strong performance in its insurance underwriting segment amid unusually low disaster-related losses. Despite this growth, net investment income fell 13% to $3.2 billion, Bloomberg Law reported, reflecting lower short-term interest rates.

Buffett's strategic divestments also shaped the quarter, with the sale of $6.1 billion in shares, Bloomberg Law noted. Notably, the firm reduced its stake in DaVita Inc. by 401,514 shares, though it still holds approximately 31.76 million shares. These moves highlight Berkshire's continued focus on liquidity management and capital allocation. Meanwhile, the company's cash and equivalents, including short-term securities, now represent a staggering 13% of total assets, underscoring its readiness to capitalize on future opportunities.

The cash surge has drawn attention from analysts and regulators. KBW analysts downgraded Berkshire to a sell-equivalent rating ahead of its earnings release, Yahoo Finance reported, citing concerns about valuation and market conditions. Separately, the Gates Foundation's $11.7 billion stake in Berkshire has become a focal point of a Senate inquiry into whether the foundation violated its tax-exempt status by funding Chinese state entities, Benzinga reported. The foundation's portfolio is heavily concentrated in three stocks—Microsoft, Berkshire, and Waste Management—accounting for 67% of its $47.78 billion trust, Benzinga noted.

Berkshire's financial maneuvers also intersected with broader market dynamics. Beacon Financial Corporation's third-quarter results revealed a $1.1 billion cash infusion from a merger, according to that Marketscreener item, illustrating how industry consolidation can reshape liquidity positions. Additionally, Buffett's recent annual letter handoff to Greg Abel signals a leadership transition, the Seeking Alpha report noted, though the company's operational stability remains intact.

As Berkshire navigates a complex regulatory and market landscape, its record cash pile and strategic flexibility position it to weather economic uncertainties. However, the Senate probe into the Gates Foundation and KBW's downgrade highlight the scrutiny facing even the most established institutions. With operating earnings and liquidity metrics at historic levels, Berkshire's next moves will be closely watched by investors and analysts alike.