To The Moon

Berkshire’s latest print reinforces a familiar theme: the core machine is still compounding at scale, but capital deployment remains extremely conservative.

Operating performance

A 34% YoY lift in operating profit – with underwriting tripling – confirms that the “boring engines” (insurance + BNSF + utilities + manufacturing) are still structurally healthy. Insurance underwriting – especially when interest rates remain high – is again a strategic weapon. Float-based investing in a high-yield environment is attractive, and Berkshire benefits disproportionately because it can underwrite profitably and invest the float at scale.

Capital allocation stance

The absence of buybacks is notable given the share price drawdown.

There are two professional interpretations:

1. Buffett/Munger’s traditional rule remains unchanged:

They only repurchase when intrinsic value > market price by a conservative margin of safety.

2. The cash stack – at US$381.6B – implies the opportunity set still does not meet their hurdle rate, and they do not see current valuations as attractive enough to deploy into.

This also indirectly signals that Buffett does not see BRK.B as meaningfully undervalued today – otherwise they would have been buying back shares aggressively.

Relative performance

+5% YTD vs the S&P 500’s +16.3% is unsurprising in a risk-on, AI-led leadership tape. Berkshire trails badly whenever “long-duration growth premium” sectors drive the index. Historically, Berkshire tends to outperform in:

down markets

volatility regimes

tightening liquidity cycles

Today’s leadership is the opposite: narrow mega-cap high-multiple growth.

Professional conclusion

Fundamentally, Berkshire remains extremely solid. Insurance profitability + float reinvestment at higher rates is a long-term tailwind. However:

the capital discipline is signalling there is no urgency to deploy

Berkshire is behaving like it is preparing for a future dislocation, not chasing this rally

relative outperformance is unlikely unless the market narrative pivots away from AI-growth leadership toward value + quality defensive cyclicals

In essence, Berkshire is acting like a coiled spring – but one that will only release when assets become clearly mispriced.

Until that moment arrives, the cash mountain continues to grow.