No. of Recommendations: 51
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.
