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Here's our initial take on Berkshire Hathaway's (BRK.A 0.30%) (BRK.B 0.14%) third-quarter financial report. Key Metrics Profits rise, but cash spikes to an all-time high First, let's start with the operating earnings generated by Berkshire Hathaway's businesses, and this was good news. The company generated $13.5 billion in operating income, up by 34% year over year, and there were a couple of main drivers. For one thing, insurance underwriting income normalized in the third quarter ($2.4 billion vs. $750 million a year ago), partly thanks to a generally less active natural disaster season. Income from the BNSF Railroad business grew 5% year over year, while income from the Berkshire Hathaway Energy business fell by 9%. Insurance investment income was lower, but this was mainly due to the lower interest rate environment compared with 2024 (this includes interest from Berkshire's Treasury securities). Speaking of Berkshire's Treasury securities, the cash and short-term Treasuries on the balance sheet are always closely watched by investors. And this figure soared to a new all-time high of nearly $382 billion at the end of the third quarter. Berkshire had unmatched financial flexibility already, and this makes it even greater. There are a few reasons why the cash stockpile swelled by nearly $40 billion. For one thing, Berkshire generated $13.5 billion in operating income as previously mentioned. Second, Berkshire didn't buy back any shares once again during the third quarter. Finally, Berkshire likely sold some stocks during the quarter, perhaps paring down its Apple (AAPL 0.31%) investment further, as the reported cost basis in "consumer products" stocks declined significantly. We won't know for sure until the company files its 13-F with the SEC in a couple of weeks. Immediate market reaction Berkshire Hathaway is one of the few companies in the market that reports its earnings over the weekend, so there's no immediate market reaction to discuss. Warren Buffett has said that this is a calculated move that allows Wall Street to digest the numbers before any trading takes place. What to watch As mentioned, one thing we don't know is what stocks Berkshire Hathaway bought and sold during the third quarter. Berkshire is required to disclose that information 45 days after the end of the quarter, so mark your calendars for Nov. 14, when we should know more. It's also worth noting that this will be the last quarterly report issued while Warren Buffett is still CEO. When the company's fourth-quarter earnings are revealed to investors, Greg Abel will have taken over as CEO (and will be writing the much-anticipated annual letter to shareholders). Helpful resources Full earnings report Investor relations page
