Berkshire Hathaway’s Sept. 25 Earnings — What Buffett’s Q3 moves mean for investors

The market backdrop has shifted meaningfully in the weeks leading into Berkshire’s September earnings. The S&P 500 is trading near record territory, with the SPY ETF at roughly 664, after a quarter‑point Fed cut and growing confidence that disinflation allows further easing without derailing growth. At the same time, the Treasury curve has begun to steepen as longer yields held near 4.2% while front‑end rates slid, reflecting both policy expectations and a bid for duration.

Against that backdrop, Berkshire’s share price has rallied into the update, with BRK.B changing hands around $499 and hovering 8% below its 52‑week high. On valuation, Berkshire’s price‑to‑book is about 1.6x using Q2 book value per share and current pricing. That’s above the crisis-era thresholds when buybacks were opportunistic only at deep discounts, but still within a band where Berkshire has been willing to repurchase stock when intrinsic value is clearly higher than market price.

The macro regime should shape investor expectations for Q3. Lower long rates can translate to mark‑to‑market gains on fixed‑income holdings and higher equity multiples, but they also compress the yield on Berkshire’s sizable T‑bill and cash pile over time if cuts continue. Elevated equity valuations argue for discipline in deployment and a tilt toward quality and defensible cash generators—the hallmark of Buffett’s process.

Buyback cadence and valuation signaling: With P/B near 1.6x and shares trading in a tight late‑September range (roughly the mid‑$490s to low‑$500s for several sessions), an acceleration in repurchases would signal that Berkshire sees a healthy gap between intrinsic value growth and market price. A step‑down would suggest patience, conserving dry powder for better risk‑reward.

Insurance engine: Investors should parse underwriting profit versus float growth. After a year of strong pricing in commercial lines, the key is whether loss cost trends remain contained and whether catastrophe experience allows for a clean combined ratio. On the investment side, modestly lower yields in September likely improved bond marks, while sustained policy easing would slowly trim interest income on cash and T‑bills in future quarters. The net effect near‑term is a mixed but manageable backdrop, with underwriting discipline still the primary earnings lever.

Investment portfolio posture: Big stakes in energy and technology have driven realized and unrealized swings. With the curve steepening and rate‑cut odds rising, watch for any rebalancing between high‑beta winners and quality cash earners. Disclosure of additional adds to defensible franchises, and any trimming of extended high‑multiple names, would reinforce a ‘quality at a reasonable price’ posture. Finally, the deployment mix—bolt‑on acquisitions versus buybacks—will speak to Berkshire’s opportunity set at current valuations.

Occidental Petroleum is reconsidering portfolio design, including potential divestiture of its OxyChem unit at a valuation reportedly of at least $10 billion. As OXY trades near $48 with a 52‑week range of roughly $35–56, the company’s shift toward a leaner, lower‑leverage model would alter the risk‑return profile of one of Berkshire’s most visible energy exposures.

A sale of OxyChem could accomplish several things: accelerate de‑leveraging, focus capital on core upstream projects, and reduce OXY’s commodity sensitivity via lower fixed obligations. For Berkshire, which benefits from both direct ownership stakes and exposure to sector cash flows, a streamlined OXY could dampen downside volatility in a cyclical sleeve while preserving upside through disciplined capital returns tied to oil macro.

Decision tree for investors watching Berkshire’s Q3 posture: If Berkshire adds to OXY or signals support for portfolio streamlining, it implies confidence in free‑cash‑flow durability with oil consolidating in the mid‑$70s (USO near $75). Holding steady suggests satisfaction with the current risk mix as Occidental executes; trimming would signal a preference to recycle capital into higher‑certainty compounders if energy beta outpaced fundamentals. Any of these moves should be weighed alongside broader capital allocation—especially buybacks—given the opportunity cost of every incremental dollar.

The Buffett’s Alpha framework shows that Berkshire’s long‑run outperformance can be largely explained by owning high‑quality, lower‑beta assets and applying modest, stable leverage—often via the insurance float. In practice, that means Berkshire compounds through businesses with durable moats, strong profitability, and conservative balance sheets, avoiding the need to stretch for cyclical leverage at the wrong point in the cycle.

Translating that to today: In a market the Fed has described as fairly highly valued, the style edge comes from insisting on quality at reasonable prices and letting time do the heavy lifting. With cash and short‑term investments north of $340 billion, Berkshire can be patient, lean into dislocations if September volatility reappears, and scale into bolt‑ons or repurchases when the spread between price and value opens.

A practical checklist for investors who want to mirror the approach without copying the portfolio: 1) favor wide‑moat businesses with high returns on tangible assets and low net leverage; 2) underwrite through the cycle, not the quarter; 3) prefer cash generative models with pricing power; 4) size positions so you can average down on volatility; 5) use cash as a strategic asset, not a drag, redeploying when expected returns rise. The goal is to earn the quality and low‑beta premia rather than chase momentum into rich multiples.

The Fed’s latest cut and guidance have supported equities, but leadership breadth and valuation comfort differ by sector. Late September often carries a volatility premium, historically the toughest month for stocks, even as forward returns can remain attractive once rate cuts take hold alongside stable growth. This argues for phasing entries and letting Berkshire’s own buybacks act as an alignment signal—lean in when Omaha is leaning in.

Portfolio construction around the print: Size core compounders to the point of sleep‑at‑night conviction; use market dips to add, particularly when quality franchises trade at or below long‑term averages on EV/EBIT or free‑cash‑flow yields. For cyclical sleeves like energy, tether adds to either commodity support (e.g., oil holding mid‑$70s) or company‑specific de‑risking events (such as balance‑sheet improvements from asset sales). Keep risk guardrails: avoid over‑concentration in single‑factor exposures, and maintain dry powder for post‑print volatility.

Reading Berkshire’s cues: In richly valued markets, aggressive buybacks often imply that intrinsic value compounding is outpacing price. A quieter deployment quarter suggests selectivity and a willingness to wait for fatter pitches. Either way, Berkshire’s discipline can help individual investors calibrate their own risk budgets—lean quality, keep leverage modest, and demand a margin of safety.