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My summary of 3Q ;-)

Berkshire Hathaway reported the company’s net worth during the first nine months of 2025 increased 7.5%, or a whopping $48.8 billion, to $698 billion with book value equal to about $485,504 per Class A share as of 9/30/25. Berkshire boasts the largest shareholders’ equity of any U.S. company.

Net Earnings and Investment Gains
On a GAAP basis, Berkshire reported net earnings of $30.8 billion during the third quarter, a 17% increase from the prior year quarter. Investment gains and losses from changes in the market prices of Berkshire’s substantial equity investments will produce significant volatility in earnings. Berkshire's five major equity holdings represent 66% of total equity holdings. Overall, during the third quarter, Berkshire’s investments gained $17.3 billion. Apple’s shiny 24% stock gain represented the core of the successful appreciation. In addition, Bank of America deposited a 9% gain while Chevron spurted 8% higher during the quarter. American Express charged 4% higher, but Coca-Cola fizzled 6% lower.

Revenues and Operating Earnings
During the third quarter of 2025, Berkshire’s revenues increased 2% to $95 billion while operating earnings surged 34% to $13.5 billion primarily due to a tripling of insurance underwriting profits and a favorable $1.4 billion swing in foreign currency from a gain of about $300 million during the current quarter compared to a loss of $1.1 billion in the prior-year quarter. Excluding the foreign currency swings, operating earnings still grew a strong 17% to $13.2 billion.

Insurance
Berkshire Hathaway’s third-quarter operating success was underpinned by its insurance segment, where underwriting earnings surged over 200% to reach $2.4 billion. This dramatic increase was primarily due to two factors: the absence of major hurricane or catastrophe losses during the quarter, and a favorable comparison to a large accrual recorded in the prior-year quarter related to a bankruptcy settlement. However, insurance investment income decreased 13% to $3.2 billion, a decline attributed to the impact of lower interest rates, a trend expected to persist following the recent Federal Reserve rate cut. The company’s insurance float grew by $5 billion, or 2.9%, during the first nine months of 2025, reaching approximately $176 billion. Due to the strong underwriting gains achieved in 2025, the cost of utilizing this massive pool of capital remained effectively negative.

Railroad (BNSF)
Burlington Northern Santa Fe’s revenues increased 2% during the third quarter to $6 billion as car/unit volume and average revenue per car/unit both increased by 0.8%, respectively. Net earnings chugged 4.7% higher to $1.4 billion during the quarter due to core pricing gains, improved operating efficiencies and lower effective income tax rates.

Energy (BHE)
Berkshire Hathaway Energy reported revenues remained relatively unchanged at $7.3 billion during the third quarter with net earnings decreasing 8.6% to $1.5 billion, reflecting lower earnings in the U.S. utilities, natural gas pipelines and other energy businesses due to higher operating expenses. On the litigation front, cumulative wildfire loss estimates by PacifiCorp were approximately $2.85 billion through September 30, 2025, of which $1.4 billion have been paid with estimated unpaid liabilities for the wildfires of approximately $1.45 billion.

Manufacturing
Berkshire’s Manufacturing businesses reported revenues increased 2% to $20 billion for the third quarter with operating earnings up 14% to $3.6 billion.

The Industrial Products segment generated a 6% increase in revenues to $9.5 billion with operating earnings jumping 24% to $1.8 billion thanks to a 36% increase in operating earnings at Precision Castparts amid the higher demand for aerospace products and a 20% increase in Marmon’s operating earnings due to improvements in several business segments.

The Building Products segment revenues increased 1% to $7 billion, and operating earnings increased 8% to $1.1 billion. However, operating earnings declined 2% during the first nine months, due to slowing customer demand and pricing pressures in the housing market.

The Consumer Products segment revenues declined 6% to $3.6 billion with operating earnings increasing 1% to $582 million during the quarter. The revenue declines were primarily due to Fruit of the Loom, Jazwares and Duracell, largely attributable to lower sales volumes. During the third quarter, Duracell recorded income tax credits. Excluding these credits, operating earnings declined significantly in the Consumer Products segment due to lower earnings from Jazwares, Forest River, Duracell and Fruit of the Loom, reflecting higher costs.

Service and Retailing
Service and Retailing revenues increased 4% during the quarter to $34.7 billion with pre-tax earnings decreasing 8% to $1.1 billion.

The Service group revenues rose 12% to $5.7 billion primarily attributable to higher revenues from aviation services thanks to increased usage at NetJets; increased construction and consulting services, including data center design, at Integrated Project Services; and higher customer demand at TTI, a distributor of electronic components. Pre-tax earnings in the Services group flew 19% higher to $678 million during the quarter, primarily attributable to increases from aviation services and TTI.

McLane’s revenues increased 4% during the quarter to $13.2 billion with pre-tax earnings delivering a tasty 19% gain to $173 million due to a higher overall gross sales margin rate.

The Retailing group revenues increased 3% to $4.8 billion during the quarter with pre-tax earnings declining 2% to $302 million. Berkshire Hathaway Automotive (BHA) accounts for 71% of the retailing group’s total revenue. BHA’s 4% increase in revenues reflected a 5.7% year-to-date increase in new and preowned vehicle sales revenues, primarily due to increased new units sold, higher average prices and changes in sales mix. Revenues of the other retailers decreased 1% during the quarter. Several of the retailers experienced sluggish customer demand due to increased competition and the impacts of higher economic uncertainty and changes in customer confidence. BHA’s pre-tax earnings increased 1.8% during the quarter attributable to earnings increases from parts/service/repairs and finance operations. Aggregate operating earnings for the remainder of Berkshire’s retailers decreased 23%, or $11 million.

During the third quarter, Pilot Travel Centers’ revenues traveled 2% higher to $10.9 billion. However, revenues declined 13% year-to-date, due to significantly lower volumes from bulk fuel sales and fuel trading activities, as well as lower average fuel prices and wholesale fuel volumes. Pre-tax earnings nosedived 108% lower during the third quarter to a loss of $17 million reflecting lower wholesale fuel and in-store gross margins and higher selling, general and administrative expenses.

Financial Position
Berkshire’s balance sheet continues to reflect significant liquidity and a very strong capital base of $698.2 billion as of 9/30/25. Excluding railroad, energy and utility investments, Berkshire ended the quarter with $680.9 billion in investments allocated approximately 42% to equities ($283.2 billion), 3% to fixed-income investments ($17.9 billion), 52% in cash and short-term investments ($354.3 billion, net of a Treasury Bill payable) and 3% in equity method investments ($25.5 billion), which includes 27.5% ownership of Kraft Heinz and 26.9% ownership of Occidental Petroleum.

Free Cash Flow
Free cash flow jumped 62% during the first nine months to $20.1 billion. Year-to-date, Berkshire sold $24 billion of its stocks. Berkshire realized $10.4 billion in gains from the sale of investments in the third quarter, which may have included a further trimming of Apple and Bank of America stock. Berkshire also purchased $13.4 billion of equity securities during the first nine months which included new positions in UnitedHealth and several homebuilders. Berkshire also purchased a net $2.3 billion of U.S. Treasury Bills and fixed-income investments year-to-date. During the first nine months, capital expenditures increased 8% to $14.7 billion, which included $10.1 billion for BNSF and BHE, its railroad and utility and energy units. Berkshire expects capital expenditures over the remainder of 2025 for BNSF and BHE to approximate $4.4 billion.

In October 2025, Berkshire agreed to acquire Occidental Petroleum Corporation’s chemicals business for $9.7 billion in cash with the transaction expected to close in the fourth quarter of 2025.

Share Repurchases
Berkshire repurchases its shares at prices below Berkshire’s intrinsic value, as conservatively determined by Warren Buffett. There were no repurchases in the first nine months of 2025 consistent with Buffett's disciplined approach to valuation.

However, given the company’s current valuation and Berkshire’s considerable cash war chest, I would not be surprised to see Berkshire resume share repurchases soon.

Thank you for the lovely summary. I had too many chores today, so this was very helpful from a reliable source…

“Increased construction and consulting services, including data center design, at Integrated Project Services.”

“This relates to the Berkshire Hathaway subsidiary named IPS-Integrated Project Services, LLC. 
IPS is a global leader in technical consulting, architecture, engineering, procurement, construction management, commissioning, qualification, and validation services, primarily for technically complex facilities in the life sciences (pharmaceutical, biotech), science and technology, and data center industries. 
Berkshire Hathaway acquired IPS in 2022 as part of the larger acquisition of Alleghany Corporation.”

I knew the Alleghany acquisition got Berkshire into the soft, squishy and huggable toy business and now I’m learning about another hot sector: data centers. You never know what you’ll find in Berkshire’s nets.

Surprised to see BHA doing well. I had thought the car business would be struggling.

A very solid quarter. Interesting to ponder the share price decline, alongside the not insignificant increase in book value you highlighted. The valuation gauge got adjusted a little in the right direction. The buyback machine may not have been fired up yet, but Warren will be paying close attention, should these trends continue.

Always comforting to see what Berkshire is doing with its cash and importantly - not doing. Buying treasury bonds with falling yields. Sounds boring and even unattractive, given inflation but of course as Charlie Munger might have said, it’s often not what you buy that’s significant but what you stay away from. Invert and avoid stupid mistakes. Business as usual at Berkshire then.

The tortoise looks foolish to some, for now. But now is the time for patience ($354.3 billion dollars in cash). The time for aggression will come…

Thank you very much for you excellent summary, babyb.

Regarding BHE, is there any possibility that BHE could sell PacifiCorp? We haven't seen the last of wildfires in the Pacific Northwest.

Nice report, thanks. Lots of good news but this also caught my eye:

Aggregate operating earnings for the remainder of Berkshire’s retailers decreased 23%, or $11 million.

That's a pretty good drop. I think overall the economy is maybe not as strong as some people believe it is.

-BD

Below were some notes I took from a recent Steve Eisman podcast on the state of the US economy. There certainly seems to be developing challenges, not showing up in the overall picture, due to the AI boom. Berkshire seems to be holding up well and most of that weakness is in smaller parts of the firm.

US shutdown and market goes up.
US economy is not growing if you exclude AI. There are therefore pockets of weakness.
COVID stimulus masked the weakness in the consumer sector. Student loan delinquencies data was not reported to rating agencies. As some point credit card delinquencies also not reported to rating agencies. Buy now pay later carried consumers. There is hidden inflation. Auto service, insurance, property taxes, health insurance. These have skyrocketed since Covid. Now student loan and credit card delinquencies are being reported and this has resulted in a 250bp drop in consumer credit as people are forced to pay student loans. During COVID, stimulus money came in four separate instalments. $800 Billion stimulus cheques. Some used it to pay down debt. Their credit scores went up. Some bought fancy cars. Others flipped houses and speculated on markets. Lots of subprime consumers became artificially prime. But they don’t have the sustainable income to justify prime. The banks bundled the loans into the asset backed securities market, with a prime label. But the loans are actually sub prime. So there are now car loans that people can’t pay.
Currently 1 in 5 new car borrowers pay more than $1,000 per month in their auto loan. There is an 84 month term loan now on auto loans that have been modified. The banks don’t want to repo cars, so they have extended the term when people can’t pay. The interest rate is 22%.
Credit card delinquencies are 90 days. It has doubled since 2021.
2021 cc delinquencies were 3.7%. Not is 7%. Still rising. Banks are suppressing the car loan defaults be modifying the term to what they can pay.
During COVID car prices when up a lot and people were paying above list prices. OEMs increased supply and now people any afford new cars. People are now buying second hand cars which have higher maintenance costs.
Used car seller, Carmax has reported weak results, with increases in bad loan provisions. Carmax is having difficulty selling expensive used cars (less than 5?years old >$30k). Consumer can only afford cars <$9k, > 5 years old. Consumer is on its knees.
Car maintenance cost inflation is very high. Banks don’t want to repo cars and people are just walking away. Small dealers are shutting down.
Car dealers will stop taking new inventory. There will be write downs.

During COVID you didn’t have to pay student loan. You got a big cheque from government.
Now you don’t have a big cheque from government. You have to pay your student loan. Prices have gone up. AI is coming and young people are finding it hard to find entry level jobs.
Pain is not just in auto. It’s in retail. It’s in buy now, pay later.
Only 30% of cars that should be repossessed are actually repossessed. It’s the biggest backdrop for car loan delinquencies since the financial crisis.
Auto is going first. Then there may be further price increases from tariffs. Consumer is headed for trouble.
Consumers has to choose between: feed the family (grocery); car payments or use public transport; pay student loan. If they default on student loan, there credit score gets tarnished and credit drys up.
If you file for BK, your student loan is not written off. Government can extract payments from wages at any time.
69% of US population are living pay cheque to pay cheque earnings $30k to $90k. 25% of this group are putting groceries in buy now, pay later. They will shift down in credit score as they increasingly default on payments.
So 25% of the 69% struggling are using buy now pay later to buy FOOD! The buy now pay later lenders are using AI to see who is not paying student loans or taking out overdrafts I real time. And they are increasingly refusing credit. This is completely unsustainable and as the months pass, credit will dry up, defaults will increase, the AI investment boom will pass peak investment and confidence in the economy will decline.

Consumers do not have the cashflow. The credit card debt has increased 50% Q3 2020 to Q2 2024 which is an additional $400 billion credit card debt. This does not include the new buy now pay later debt. The credit card companies are cutting credit limits based on deteriorating credit scores.

The suppression of the deterioration (extending terms; buy now pay later) has postponed the issue but this lag is now manifesting in a broken consumer. We are going to pay the piper over the next 12 to 18 months unless something unexpected happens.

We are at 11:59. A US recession is coming.

Once the US economy goes into a recession share prices will stop going up and boomers will start to sell equities, which are higher than they have ever been.

"Below were some notes I took from a recent Steve Eisman podcast on the state of the US economy."

The Eisman podcast is great! Since I started listening to him I have been tunning out a lot of the rest. No schmaltz, great discussion and honest opinions.

Great post bigmac! To paraphrase HL Mencken, no one ever went broke underestimating the importance of the car to the American public.

As an added threat, modern cars are not only incredibly expensive, they are loaded with sensors. One bump on the front can cost thousands in repair. They will be increasingly difficult to keep running economically.

Regarding BHE, is there any possibility that BHE could sell PacifiCorp? We haven't seen the last of wildfires in the Pacific Northwest.

In May, I sat down and wrote a few page of pro/cons of putting in a ground-mounted solar array. (We are Pacific Power i.e. PacificCorp customers.) Most of it was number-crunching*

Under the fuzzier 'soft considerations', I channeled what I remembered from the last annual meeting:

"Pacific Power is not in the best of shape. Management has recently gone public with, “You can’t get by without us, but we won’t stay with the current structure.”

and

"If the current PP management reaches the limits of their patience with government intransigence and regulatory hurdles and sells the company, the new owners would presumably apply for (much) higher rates and/or provide inferior service"

My takeaway from the meeting in May was that Greg Abel publicly put PacificCorp on notice that BHE/Berkshire's patience was not infinite

-- sutton

*conclusion: neutral to positive cash flow from day one; every other argument was in favor

As an added threat, modern cars are not only incredibly expensive, they are loaded with sensors

Another added threat (for me): Since last year every car sold in the EU needs to alarm it's driver if he is going over the speed limit (recognized by either GPS+online maps or cameras (speed limit signs)).

As I couldn't stand constantly flacking dashboards and/or beeping that limits my future cars to 2023 or older.

Hi roberts,
Not sure anyone will want to acquire the potential liability:

A utility owned by Warren Buffett's Berkshire Hathaway warned on Monday it could face strained liquidity and lose its investment-grade status after a judge sped up the pace of trials over the 2020 Labor Day weekend wildfires in Oregon.

PacifiCorp has already set aside $2.85 billion, including $100 million in the third quarter, for lawsuits seeking $55 billion over the burning of more than 2,000 structures and 500,000 acres in Oregon and northern California.

https://finance.yahoo.com/news/buffett-owned-utili...

Not sure anyone will want to acquire the potential liability

Agree, it is far more likely Greg will put Pacificorp into bankruptcy above a certain level of damages and hand off the keys to various states they operate in.

Thank you, iluvbabyb and Munger_Disciple. I guess Greg and Warren will figure out what to do. I hope they decide soon. The risk of trying to hold on is that more fires are sure to occur. PacifiCorp's book value is $11B. If they declare bankruptcy, it will be interesting to see who ends up owning PacifiCorp and how much they pay. Utah could be a decent business, but I wouldn't touch Oregon or California. It's like owning a company that makes football helmets, which is something Warren has said he wouldn't want to do. Hopefully, the 2025 fire season could soon be over. Keep your fingers crossed.

Another added threat (for me): Since last year every car sold in the EU needs to alarm it's driver if he is going over the speed limit (recognized by either GPS+online maps or cameras (speed limit signs)).

As I couldn't stand constantly flacking dashboards and/or beeping that limits my future cars to 2023 or older.




I recently rented a 2025 Renault and I found that feature completely annoying as there was no way to set the margin at which the alarm beeped. I would be driving 51 or 52 km/h in a 50 zone and the damned thing would start beeping at me. I would love to have that kind of sensor on my car and set it at +20 km/h so that it would actually beep at me when I meaningfully exceed the limit, but when the damned beeps begin at 1 km/h over, it's enough to drive you to drink.


SJ

Since last year every car sold in the EU needs to alarm it's driver if he is going over the speed limit (recognized by either GPS+online maps or cameras (speed limit signs)).

"I recently rented a 2025 Renault and I found that feature completely annoying as there was no way to set the margin at which the alarm beeped."



Here in the US, within a few months there would be youtube videos on how to disable that. In 6-12 months devices would be available on ebay and Amazon, ready to install.

Just like the auto-stop/start mis-feature on new cars.

Here in the US, within a few months there would be youtube videos on how to disable that.

I have a friend who could do that for me --- resulting in driving in the EU with a not road legal car => resulting in no insurance coverage in case of an accident if found out.

Another added threat (for me): Since last year every car sold in the EU needs to alarm it's driver if he is going over the speed limit

The "feature" that prevents me from being tempted by almost any recent car is the "glass cockpit" approach to controls, where almost everything is on the touch screen. Radio, heat, hazard lights, you name it. Multiply nested menus for simple things like changing the radio station are not just annoying, they're dangerous.

From the FT:
https://www.ft.com/content/b46311ba-a5a1-4754-8d40...
"A 2005 Volvo with traditional physical buttons allowed drivers to complete basic tasks in just 10 seconds, less than one-quarter of the time it took in modern touchscreen-equipped cars, where simple tasks took up to 44.6 seconds to complete, according to a Swedish road test by Vi Bilägare. A study by the Transport Research Laboratory found that using in-car touchscreens can impair driver reaction times more than being over the legal alcohol limit or under the influence of cannabis."
How many pedestrians do you pass in 44 seconds?

Jim

Here in the US, within a few months there would be youtube videos on how to disable that.

I have a friend who could do that for me --- resulting in driving in the EU with a not road legal car => resulting in no insurance coverage in case of an accident if found out.


US citizens are not the same as Europeans. The US government listens to its citizens better than the non-elected EU government listens to Europeans.

There was a time the our government had the bright safety idea of requiring the front seat occupants to fasten their seat belts before the car would start. A bit of a problem when the driver would put packages on the passenger seat that made the car think there was a passenger. You could reset the lockout by raising the hood and pushing a button tucked away UNDER THE HOOD, and it would let you try to start the car ONCE. If the car didn't start on the first try, you had to go under the hood again. Very annoying for a woman wearing high heels and it was raining.

People let the Federal government about their displeasure and they soon canceled that law.

which is why, the old basic "steam gauges " , were kept alongside glass cockpits in planes...

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