Berkshire Hathaway Reports 17% Profit Increase Amid Leadership Transition
Berkshire Hathaway’s profits rose by 17%, driven by a mild hurricane season and gains in paper investments. This performance comes as the company prepares for Warren Buffett, its legendary 95-year-old CEO, to step down in January.
Major Investment and Cash Reserves
Last month, Berkshire made a significant $9.7 billion investment in OxyChem. Despite this being the largest deal in years, it barely affected the company's substantial $381.7 billion cash reserve recorded at the end of September.
Leadership Change and Stock Performance
Warren Buffett’s Vice Chair, Greg Abel, is expected to succeed him as CEO in January, although Buffett will continue as chairman. Berkshire’s Class A stock, which reached a peak of $812,855 before Buffett’s surprising announcement at the May annual meeting, closed recently at $715,740.
Notably, Berkshire did not repurchase any of its own stock during the quarter, indicating Buffett may still consider the shares overvalued.
Investor Expectations After Transition
CFRA Research analyst Cathy Seifert stated, “I expect investors will clamor for more details from Berkshire after Abel takes over, and calls will also grow louder for the company to finally pay a dividend if it can’t find better uses for all that cash.”
However, with Buffett remaining as chairman, significant immediate changes are not anticipated.
Author’s Summary
Berkshire Hathaway’s profit rise and cautious stock moves highlight investor focus on the upcoming leadership change as Buffett prepares to hand over CEO duties to Greg Abel in January.