Berkshire $BRK.B Posts Record $9.6B Buyback as Earnings Slide 5.8%

$BRK.B dropped Q3 earnings this week and the numbers are, depending on your worldview, either deeply reassuring or mildly terrifying. Operating earnings fell 5.8% to $12.7 billion, but Berkshire turned around and repurchased a record $9.6 billion in its own shares, while somehow still growing its cash pile to a staggering $377.4 billion. That's not a war chest. That's a war economy.

Bloomberg Podcasts covered the buyback angle closely, noting that the repurchase pace might actually slow in Q4 after a post-earnings stock rally made shares less attractive to buy back. The read from analysts: Buffett bought aggressively because the stock got cheaper through the quarter, not because he's out of ideas. That's very on-brand for a guy who's been hoarding cash since most of us were in middle school.

Retail sentiment on YouTube is doing the classic split-screen. The bull camp sees a $9.6 billion buyback as Buffett literally putting money where his mouth is, treating his own stock as the best risk-adjusted bet available in a market where the VIX just spiked 69.66% in a single day. The bear camp keeps pointing at that cash pile and asking why Buffett isn't deploying it into anything else, implying he sees nothing worth buying out there. Both sides are kind of right, which is the most annoying possible outcome.

Meanwhile, GEICO continues to be a quiet bright spot inside the Berkshire empire, and the company's unusual strategy of backing its insurance business with equities rather than fixed income, highlighted in Bloomberg's coverage, is worth watching as the 10-year Treasury yield sits at 4.84%. Most insurers would be loading up on bonds right now. Buffett is not most insurers.

The broader backdrop isn't helping anyone think clearly. The S&P 500 dropped 4.36% on November 5th alone, the Nasdaq had its worst weekly drop since March 2020, and Iran is apparently mining the Strait of Hormuz for fun. In that context, a company sitting on nearly $400 billion in cash looks less like a missed opportunity and more like the only adult in the room.

Berkshire earnings falling while buybacks hit a record is exactly the kind of paradox that sorts the patient investors from the people who check their portfolios every 20 minutes. Buffett has been patient since 2002. He can probably wait another quarter.