Berkshire Hathaway After Q3: Where Buffett Is Deploying Cash — Insurance Float, Buybacks and the Portfolio’s Quiet Rotations

Berkshire’s operating profit jumped 34% year over year to $13.485 billion in the third quarter, powered by a dramatic rebound in insurance underwriting income to $2.37 billion. The company also posted total GAAP earnings of $30.8 billion, with results aided by investment gains and a $331 million benefit from foreign-currency debt holdings relative to a loss a year earlier. Importantly, the quality of the beat was anchored in core operations, not just mark-to-market swings.

Despite those strong internals, Berkshire did not repurchase any shares in the first nine months of 2025. The calculus is old-school Buffett: buy back only when shares trade at a clear discount to intrinsic value. That threshold was not met, even as Berkshire’s stock retreated from its spring peak. Class A and B shares were up roughly 5% year to date through the Q3 print, lagging the S&P 500’s 16.3% gain, and A shares remain below the $812,855 high set just before Buffett announced he would pass the CEO baton to Greg Abel at year-end. The absence of buybacks, however, supercharged liquidity.

Berkshire’s cash hoard swelled to a record $381.6 billion, eclipsing the prior peak set earlier this year. The company was a net seller of equities in the quarter, realizing a taxable gain of about $10.4 billion. Put differently, Berkshire leaned into optionality — harvesting gains from appreciated public positions at what it views as rich valuations and recycling the proceeds into Treasury bills and cash while awaiting more compelling pitches.

The one big swing: last month’s agreement to acquire Occidental Petroleum’s OxyChem for $9.7 billion in cash. It is Berkshire’s largest deal since the Alleghany acquisition in 2022 and a template for the kind of controlled, understandable, cash-generative assets the conglomerate favors when public markets look expensive.

The quarter showcased the structural advantages of Berkshire’s insurance ecosystem. A relatively mild catastrophe season reduced large-loss pressure and helped GEICO and the reinsurance units deliver a material underwriting profit. The $2.37 billion in underwriting income is more than a cyclical rebound; it also reflects improved pricing and risk selection discipline across lines that had suffered from inflationary claims and volatility in prior periods.

That underwriting strength matters twice over. First, it is a direct contributor to operating earnings. Second, consistent profitability grows Berkshire’s insurance float — the premium-derived, low-cost capital that Berkshire can invest on behalf of policyholders until claims come due. In a higher-yield world, float becomes more valuable. With Treasury bills and short maturities currently returning around 3.8% to 4.1% depending on tenor, each dollar of float deployed to T‑bills earns a real income stream while Berkshire waits for better equity or M&A opportunities.

Still, policy and macro uncertainty warrant measured deployment. The Federal Reserve cut rates for the second consecutive meeting in late October and signaled a cautious, stepwise approach ahead. Chair Jerome Powell likened the path to “driving in the fog” — a metaphor that resonates with Berkshire’s current posture. With inflation still above target, tariffs contributing to price stickiness, and labor data mixed, the rate trajectory into December is contested inside the Fed. Berkshire’s response: let cash and T‑bills work, maintain a high hurdle rate for risk assets, and favor deals where it can influence outcomes and cash flows.

One of the most telling datapoints from Berkshire’s quarter is what it didn’t do. Despite a noticeable pullback in the stock from spring highs and robust operating cash generation, Berkshire refrained from share repurchases for the first nine months of 2025. Historically, Buffett has only authorized buybacks when he and the board believe Berkshire trades meaningfully below intrinsic value. The Q3 stance implies a high bar remains — even with shares lagging the broader market this year.

That discipline shouldn’t be misread as inertia. Instead, the company appears to be letting a historically large cash position compound at attractive short-term rates until prices (or opportunities) improve. The opportunity cost of doing nothing rose dramatically in the zero-rate years; today, holding T‑bills near 4% while you wait is competitive with many incremental risk investments. As a result, buybacks have to clear both the intrinsic value bar and the short-rate hurdle.

For investors, this raises a live debate about capital returns. As Greg Abel takes over as CEO in January, many expect a more detailed articulation of Berkshire’s capital allocation framework in 2026 letters, including updated thinking on buybacks and the perennial dividend question if attractive deals remain scarce. While Buffett will remain chairman, the calls for clearer disclosure and a more regular cadence of investor communication are likely to grow — alongside pressure to return cash if the opportunity set does not broaden.

Berkshire’s net equity selling, which generated a sizable $10.4 billion taxable gain, reflects active trimming into elevated valuations and, potentially, pruning of lower-conviction holdings. The rotation toward liquidity is consistent with a view that valuation dispersion remains wide, AI enthusiasm is supporting index multiples, and patience is warranted until volatility makes high-quality franchises available at more compelling prices.

The OxyChem transaction provides a window into the kind of investments that can still get greenlit. Petrochemicals are cyclical, but OxyChem is a leading, cash-generative platform with operating characteristics Berkshire knows well. All-cash financing ensures control over capital structure and reduces execution risk, while the asset’s durability and cash conversion strengthen Berkshire’s consolidated cash flows — a helpful complement to insurance-driven float income. It also underscores a preference for situations where Berkshire can influence outcomes rather than merely ride market beta.

Looking ahead, the next 13F and subsequent filings will help confirm where the “quiet rotation” landed within the public portfolio: incremental trims or adds around core positions, continued bias to cash and T‑bills, and opportunities created by sector-level dislocations. Utilities were a relative soft spot in the quarter — segment profits down about 9% to $1.489 billion — reminding investors that rate and regulatory cycles can ebb and flow across Berkshire’s sprawling set of operating companies.

Macro visibility remains limited. Inflation metrics are still running above the Fed’s 2% target, tariffs are acting as a structural cost wedge, and labor-market signals are mixed, with slower hiring and longer job-finding times despite a still-modest headline unemployment rate. Meanwhile, equity markets have been buoyed by AI-driven capex and profit-cycle optimism, complicating the task of finding mispriced assets at scale. Against that backdrop, optionality — the ability to act quickly when prices reset — is itself a source of value, and Berkshire’s record cash position institutionalizes that optionality.

The Fed’s December 10 meeting will be pivotal for short-term rate expectations. Another cut would nudge down T‑bill income, but the bigger lever for Berkshire is the implied hurdle rate for new investments. If the policy path remains foggy, Berkshire’s conservative stance should persist: disciplined buybacks only at clear discounts, opportunistic equity purchases on dislocations, and a bias toward control transactions in understandable, cash-rich businesses. The current yield curve — modestly upward sloping from 3 months to 10 years — supports a wait-and-see approach, especially with no urgency to “reach” for returns.

Finally, the leadership transition. Greg Abel’s elevation to CEO will not alter Berkshire’s DNA, but it may change the cadence of communication. Investors widely anticipate more detail around segment-level performance, capital allocation priorities, and return-of-capital guardrails beginning in 2026, when Abel takes over letter-writing duties. The litmus test won’t be stylistic — it will be whether the Berkshire playbook of patience, pricing power and probabilistic thinking can continue compounding per-share value in an era when caution is a competitive advantage.