Berkshire's $377 Billion Question: Record Cash, Falling Profits and Abel's Buyback Bet

Executive Summary

OMAHA — Berkshire Hathaway's third quarter delivered the paradox that has defined the post-Buffett era: profits fell, and the cash pile grew anyway. Operating earnings dropped 5.8 percent to $12.705 billion in the three months to September 30, the company reported on Saturday, November 7, while cash and Treasury bills reached a record $377.4 billion. The question the numbers pose is simple: with more money than ever, what does Berkshire do next?

The drag came from insurance, the engine on which Warren Buffett built the empire. Underwriting earnings fell 43 percent to $1.352 billion as Geico's costs climbed, and insurance investment income dropped 14 percent to $2.734 billion. Yet the rest of the conglomerate held up: railroad, energy and manufacturing earnings all expanded, revenue rose 11 percent to $105.65 billion, and operating earnings for the first nine months of 2026 reached $37.0 billion, up from $34.3 billion a year earlier.

The headline response was not a deal but a buyback. Berkshire repurchased $9.6 billion of its own shares in the quarter — more than double the $4.5 billion of the second quarter — and about $2 billion more in October. Under Greg Abel, who succeeded Buffett as chief executive, the company is showing a greater willingness to put its cash to use. This study measures the slump, the cash mountain and the buyback bet, and tests what each says about the year ahead.

Methodology

This study rests on Berkshire Hathaway's third-quarter 2026 earnings release and Form 10-Q, published on Saturday, November 7, cross-checked against Reuters reporting, market-wire summaries and independent analyses of the filing. Every load-bearing figure appears in at least two independent reports. Where sources count cash differently — a gross balance-sheet total against Berkshire's own adjusted measure — the distinction is stated rather than smoothed over.

Figures are labelled as reported, estimated or market prices, and quarter-on-quarter comparisons use the company's own year-earlier figures. Forecasts, including what the buyback pace implies for the fourth quarter, are presented as readings of the data, not as company guidance.

Empirical Findings

Operating earnings are the measure Buffett long favoured, because they strip out the swings of the stock portfolio. On that measure the quarter was softer: $12.705 billion against $13.485 billion a year earlier, a fall of 5.8 percent. Net earnings, which include paper gains on Berkshire's $335.5 billion equity portfolio, fell 28 percent to $22.112 billion from $30.796 billion, as investment gains shrank to $9.407 billion from $17.3 billion. The company itself cautions that the gain figure in any quarter is usually meaningless.

Insurance supplied almost all of the weakness. Underwriting earnings fell 43 percent to $1.352 billion from $2.372 billion, insurance investment income fell 14 percent, and overall insurance profit declined 26 percent. Geico's rising costs drove the underwriting fall. The split inside the conglomerate mirrors the divide measured in our study of America's two-speed economy, where strong headline figures coexist with strained operating lines — here, a railroad, energy and manufacturing recovery against an insurance slump.

The cash pile is the quarter's real story. Cash, equivalents and short-term Treasury bills totalled $377.435 billion at the end of September, up from $365.514 billion at the end of June and a record on that measure, though below the $397.4 billion peak of March. Berkshire's own figure, which nets off Treasury bill purchases that settled in October, was $352.3 billion. Either way, the pile is the largest war chest in corporate history, parked mostly in Treasury bills yielding around 4 percent while the company waits.

Buybacks are now the release valve. The $9.6 billion repurchased in the quarter was the largest quarterly total of 2026 and more than double the second quarter's $4.5 billion, taking the nine-month total to about $14.4 billion, with roughly $2 billion more spent in October. The acceleration came as US stocks lurched: the Nasdaq plunged 5.52 percent on November 5 in the rout that wiped $2.5 trillion off the market in a day. Berkshire bought its own shares while the market fell — a signal, in Buffett's old language, that its own stock looked cheap.

The scale of the cash also frames the succession. Abel, who took over from Buffett, is showing a greater willingness to deploy the hoard than his predecessor, who let it compound untouched for years. With 1,418,900 Class A equivalent shares outstanding at the end of September, the $9.6 billion quarter retired a meaningful slice of the company. Yet the pile still grew by about $12 billion in the quarter — buybacks, at this pace, barely dent it.

Outlook

Three paths are visible. If insurance recovers and the railroad and energy units keep expanding, operating earnings can return to growth in the fourth quarter and the buyback pace can be read as confidence. If underwriting stays weak and the market's November slide deepens, the cash pile becomes a defensive cushion — and the pressure to find a large acquisition grows, as record central-bank gold buying shows investors already paying up for safety elsewhere.

The likeliest course is a middle one: steady buybacks, no mega-deal, and the cash pile drifting higher until a dislocation creates a target big enough to move the needle. Berkshire's history says Abel will wait for a price he likes. The numbers say he can afford to wait longer than anyone else in the market. News Plus Globe's business and finance desk will track the fourth-quarter filing and the next buyback figures as they land.