Berkshire Hathaway’s profits rise 17% as Warren Buffett prepares to step down as CEO

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OMAHA, Neb. (AP) — The profits of Warren Buffett ‘s company improved 17% thanks to a relatively mild hurricane season and more paper investment gains this year as Berkshire Hathaway prepares for the legendary 95-year-old investor to relinquish the CEO title in January.

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But last month’s $9.7 billion investment in OxyChem won’t do much to diminish the $381.7 billion cash pile that Berkshire was sitting on at the end of September even though it is the biggest deal the company has made in years.

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The biggest thing on most investors’ minds right now is that Buffett Vice Chair Greg Abel is set to succeed him as CEO in January, although Buffett will remain chairman at Berkshire. The Class A stock is well off its peak of $812,855, set just before Buffett surprised shareholders at the annual meeting in May by announcing he will step back. It closed Friday at $715,740, but Berkshire still didn’t buy back any of its own stock in the quarter, which suggests Buffett thinks it is still overvalued.

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CFRA Research analyst Cathy Seifert said she expects investors will clamor for more details from Berkshire after Abel takes over, and that calls will also grow louder for the company to finally pay a dividend if it can’t find better uses for all that cash. But with Buffett remaining chairman there may not be any immediate changes.

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“The lack of discussion and disclosure — I think has a lot of the investment community frustrated,” Seifert said. Berkshire has never had public or investor relations departments, and the company skips the quarterly investor calls that nearly every public company holds. Buffett has long said he prefers to share results with every investor at the same time, on Saturdays, and give them the weekend to digest the results before the markets reopen.

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Edward Jones analyst Jim Shanahan said he’s excited to see what changes Abel might make after he becomes CEO and whether he will assemble a team of executives around him to help manage the various businesses and decide where to invest Berkshire’s cash. But investors might have to wait until Abel’s first letter to shareholders in late February or the annual meeting in May to learn more about his plans.

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“I just think it’s a chance that Abel is going to do some things differently,” Shanahan said. “I think that with him being more involved in operations than Warren had been historically, I think that he’ll likely have a team around him, which would be different.”

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Abel has already been managing all of Berkshire’s noninsurance businesses since 2018, and the CEOs who report to him say they’ve been impressed by his business acumen, sharp advice, and availability to help when they have questions.

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Berkshire said Saturday that it earned $30.796 billion, or $21,413 per Class A share, in the quarter. That’s up from last year’s $26.251 billion, or $18,272 per A share.

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But those bottom-line figures are always distorted by the current value of Berkshire’s massive investment portfolio and any stock sales, which this year added $17.3 billion to the company’s profits.