Berkshire Hathaway: here’s what the market thinks about the post-Buffett era

On the one hand, Warren Buffett, who, in that very same latest quarterly report, confirmed that he would be handing over the reins to Greg Abel – as CEO – at the start of 2026. On the other, the trends revealed by the recently published financial results and the outlook for the future. This is one way in which one might attempt to approach the complex world of Berkshire Hathaway .

The Oracle of Omaha – as was announced at last May’s shareholders’ meeting – has decided to step down. Of course! It is likely that the 95-year-old financial guru will continue to have some influence over the holding company’s decisions. He himself has stated that he will retain ‘a significant number of Class A shares’ until shareholders feel comfortable with his successor. That said, however, from next year it will be Abel who leads the group, chairs the Annual Shareholders’ Meeting and signs the ‘legendary’ Letter to Shareholders. This development – inevitably – on the one hand marks a break with the past; and, on the other, has had an impact on the stock market. According to the Bloomberg terminal, both Class A shares (each worth more than $750,000) and Class B shares (available to retail investors) began a downward trend coinciding precisely with the last shareholders’ meeting. This trend – according to experts – has been influenced by a number of factors. In this regard, KBW has pointed out that the fall in interest rates has affected returns on investments in the float’s fixed-income securities (i.e. insurance premiums not absorbed by claims). Nor can it be denied that the trade war between the US and China was certainly not a boon for the railway business. However, it is undeniable that Berkshire Hathaway has always benefited from the so-called ‘Buffett premium’. It is no secret that the investment rationale of a great many investors – particularly retail investors – was based solely on their enormous faith in the Oracle of Omaha. It all begins and ends there. Now, with the change of ownership, that rationale has vanished and the share is said to have lost its appeal.

That’s right! The start of the downtrend in 2025 (which later turned into a sideways trend) was preceded by a surge in the price-to-book ratio, which had reached 1.7 times. To put it another way: the Class B shares had become so expensive – the historical average for the decade is 1.3 times – that the pullback may well have been a natural occurrence. What’s more. The enormous amount of accumulated liquidity – $358 billion as at 30 September 2025 – is, according to some market participants, an indication not of a sensible pause in the investment strategy, but rather of an inability to capitalise on new trends. One example above all: artificial intelligence. Consequently, the shares – coupled with the market’s waning interest in a value stock such as Berkshire Hathaway – would have been sold regardless of the impending handover. That said, however, the very fact that Buffett continues to vouch for Abel’s qualities and his presence is proof that the handover is, in any case, a delicate moment. This is a transition that the DIY investor must watch carefully and which – evidently – only time and, above all, the conglomerate’s financial results will gradually push into the background. Indeed, the financial results. What, then, is the company’s financial structure? To answer this question, we must first outline – in broad terms – the structure of the group’s business. On closer inspection, the holding company divides its operations into five major areas. The first is the insurance sector, where – beyond the various companies – a distinction is made between underwriting (policy underwriting) and the investment of the float. The second, on the other hand, consists of the railways. This includes BNSF Railway, which is one of North America’s leading rail operators. The third area, then, is the Energy sector. This encompasses a range of businesses: from electricity utilities to gas pipelines and renewable energy sources. The fourth area (Manufacturing, Services and Retail) comprises industrial and commercial companies. Finally, the fifth segment: Investing. This – representing the outcome of ‘major’ investments on the stock market (from American Express and Apple to BofA, Coca-Cola and Chevron, to name the most significant) – is not an operational area. However, it clearly has a significant impact on the accounts.

Well then: in the third quarter of 2025, Berkshire Hathaway’s net profit stood at $30.86 billion, up 16.4 per cent compared with the same period in 2024. Profitability over the nine-month period, however, slowed. In this case, profit stood at $47.9 billion, compared with $69.9 billion a year earlier. Why such a trend? The answer is complex. With regard to the last quarter, the insurance segment played a central role. This segment posted a profit attributable to the shareholder from underwriting (premium income less claims and related expenses) of $2.37 billion, compared with $0.75 billion twelve months earlier. This increase was driven by the near absence of catastrophic events and the recovery of claims from previous years. The comparison is also influenced by extraordinary provisions recorded in 2024 in connection with a bankruptcy case. Profitability from investments, however, has fallen due to the drop in interest rates. As for the Energy sector – alongside the railway segment’s profit, which remained more or less stable – profitability, for its part, slowed in the wake of lower earnings in US utilities and gas transport. Conversely, the industrial, retail and services sector performed well. This was characterised by an increase in profit (+8 per cent) thanks to the recovery in industrial demand and – above all – cost efficiency measures. Finally: the Investing segment. Here, it is worth noting the increase in profitability – albeit purely on the books – driven by the market rally. In short: in the last quarter, the group benefited from growth in the insurance sector’s technical results and the strong performance of the industrial sector. Looking, however, at the results for the first nine months? Here, it becomes clear that the slowdown in profitability is attributable to stock market investments. Between the start of January and the end of September 2025, the investment arm posted a profit attributable to shareholders of 17.2 billion. In the same period last financial year, however, earnings stood at 36.39 billion. It is clear that, given such a sharp drop, profitability has fallen. On the other hand, when considering operating activities alone, profit attributable to shareholders – for the first nine months of 2025 – is up on last year.

Against this backdrop, Berkshire Hathaway’s core business appears robust. So much so that analysts – setting aside concerns about falling interest rates affecting fixed-income investments and the possibility that the insurance cycle (partly due to tariffs squeezing margins in the motor insurance sector) may have peaked – are primarily asking one question: will this massive cash hoard be put to good use? The company has provided an initial answer with its move on Occidental Petroleum. The petrochemical group was acquired for 9.7 billion. Not only that: the company has revealed a new 4.3 billion stake in Alphabet. That said, Buffett has always emphasised: ‘We’d like to spend (the cash), but we won’t do so unless we’re convinced we’re doing something with very little risk that could earn us a lot (...) the opportunities aren’t attractive’. Thus – as Charlie Bilello points out – one can look at the stake in Apple, which has been gradually reduced to the current 238.2 million shares. When the holding company began buying shares in the ‘bite-marked apple’ group in 2016, the stock was trading at around 10 times earnings and 2 times turnover. ‘Today, Apple,’ the expert continues, ‘is trading at over 36 times profits and almost 10 times sales. In other words: Buffett and his team see prices that are very high relative to earnings, and therefore less scope for making “low-risk, high-return” investments. Hence the caution in using cash reserves.’ This caution is also characteristic of the stock market itself, which is, in fact, in a sort of holding pattern with regard to the holding company. A wait which – evidently – could be resolved – one way or another – in the wake of the new CEO’s future moves. For the time being, according to Seeking Alpha, the price-to-book ratio currently stands at 1.5 times (over the last 12 months). This figure is still higher than the median for the comparable sector. Profitability, for its part, is described as ‘positive’, with a return on total assets of 5.5 per cent. In other words: a higher percentage than that of the benchmark sector.