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Berkshire Hathaway speeds up stock buybacks, though profit falls
Berkshire Hathaway stepped up share buybacks under chief executive Greg Abel, even as its third-quarter profits fell. The move suggests Abel is more willing than Warren Buffett to use the company’s large cash reserves, and investors watch Berkshire as an indicator of the wider US economy.
Berkshire repurchased $9.6 billion of shares from July to September and about $2 billion more in October, after spending $4.8 billion earlier in the year. Operating earnings fell 6% to $12.71 billion and net earnings dropped 28% to $22.11 billion, while revenue rose 11% to $105.65 billion; the company ended September with $356.9 billion in cash and equivalents. Berkshire cited weaker insurance results and lower investment gains, and said economic and geopolitical uncertainty was weighing on demand at some retail businesses.
In short
- Berkshire bought back $9.6 billion of shares in the third quarter.
- Operating earnings fell 6% to $12.71 billion.
- The company still held $356.9 billion in cash at September’s end.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
The buybacks can be seen as a sensible use of Berkshire’s large cash reserves: repurchasing shares may benefit continuing shareholders when management believes the price offers value, while signalling confidence despite weaker quarterly profits. Abel’s willingness to deploy more capital could also reassure investors that Berkshire can adapt its approach as conditions change.
The case against
The scale and timing of the buybacks may be questioned when operating earnings are falling and economic uncertainty is weighing on some businesses. Holding more cash would preserve flexibility for future acquisitions or a downturn, and investors may reasonably ask whether repurchases are the best use of capital at the current share price.
Explained simply
Berkshire Hathaway is a large US company that owns businesses in areas such as insurance, rail transport, energy and retail, as well as holding shares in other companies. Its results reflect activity across these businesses and its investments, so investors often use them to gauge conditions in parts of the US economy.
Greg Abel became Berkshire’s chief executive after Warren Buffett, who led the company for decades and built its reputation for keeping substantial cash reserves. Berkshire can use that money to buy other businesses, invest in shares or buy back its own shares; buybacks reduce the number of shares held by investors.
The company’s earnings can rise or fall with insurance claims, investment values and customer demand. Its cash balance and decisions about how to use it are watched because they show how Berkshire is responding to opportunities and uncertainty.
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