Berkshire's Record $381.7B Cash Pile Confronts Leadership Shift and Analyst Doubts

Berkshire Hathaway Inc.'s cash reserves surged to a record $381.7 billion in the third quarter, according to filings released in late October, marking a significant milestone for Warren Buffett's conglomerate as it navigates a shifting economic landscape a Fortune report. The cash hoard, which grew despite $6.1 billion in share sales by Buffett during the period, underscores the firm's strategic flexibility amid low disaster activity and robust insurance underwriting profits. Operating earnings for the quarter jumped 34% to $13.5 billion, driven by gains in its insurance and reinsurance units, though net investment income declined 13% to $3.2 billion as short-term interest rates fell.

The insurance segment, a cornerstone of Berkshire's operations, saw pretax underwriting profits after posting losses in the prior-year period. This turnaround was fueled by a relatively mild hurricane season, which reduced catastrophic losses compared to the previous year's devastation from Hurricane Helene, according to a WRAL report. Geico, Berkshire's auto insurer, however, reported a 13% drop in pretax underwriting profit due to higher claims, even as customer acquisition continued, the Fortune report noted. The firm's broader insurance businesses, including GEICO and reinsurance operations, contributed to the improved operating results, reflecting disciplined underwriting and favorable market conditions.

Buffett, who plans to step down as CEO by year-end, has maintained a cautious approach to capital deployment. For the fifth consecutive quarter, Berkshire avoided repurchasing its shares, despite a nearly 12% stock price decline following his May announcement of his succession plan. The company's massive cash holdings—now the largest in its history—have drawn both praise for their strategic safety and scrutiny over potential underutilization. Analysts note that even a major $9.7 billion investment in OxyChem in September did little to dent the cash pile.

The upbeat earnings report contrasts with a recent downgrade from Keefe, Bruyette & Woods (KBW), which cut Berkshire to "underperform" citing risks to its long-term growth, according to a Yahoo report. Analyst Meyer Shields highlighted challenges including narrowing margins at Geico, exposure to U.S.-China trade tensions via the BNSF railroad, and the impending leadership transition; Shields wrote in a Newsmax piece that "Buffett's departure and reduced interest income from cash reserves could weigh on investor confidence," lowering his price target for Class A shares to $700,000 from $740,000. The downgrade came as Berkshire's stock lagged the S&P 500 by over 28 percentage points since Buffett's May announcement, as noted by The Economic Times.

Berkshire's performance also drew attention from institutional investors. The Bill & Melinda Gates Foundation, which holds a $11.7 billion stake in Berkshire, faces a Senate inquiry over alleged $23 million in China-related grants, according to a Benzinga report. While unrelated to Berkshire's core operations, the probe underscores the foundation's outsized influence on the stock market and its alignment with Buffett's investment philosophy.

Looking ahead, Berkshire's ability to deploy its cash effectively will be critical. The firm's diverse portfolio—spanning railroads, utilities, and manufacturing—provides a snapshot of U.S. economic health, the Fortune report observed. Yet, with falling interest rates and shifting trade dynamics, Buffett's successors face the challenge of maintaining the conglomerate's legacy of disciplined capital allocation. Third-quarter results, set for release on November 1, will offer further clarity on the path forward.