Waits. Does not buy. That was the stance throughout April and across the three months of the first quarter. The message Greg Abel, the new CEO who succeeded Warren Buffett, delivered to the market in his first quarterly report was just as resolute: watch from the sidelines with a record pile of cash.
Berkshire Hathaway announced its first-quarter results on the 2nd (local time) and said its cash and short-term Treasury holdings had reached $397.4 billion, or about 586 trillion won.
That was up by $24 billion from the end of last year’s $373 billion, setting a new record once again in a pattern of breaking its own cash pile high every quarter. The question the market posed to Abel, who took the stage at the annual Omaha shareholders’ meeting that same day for the first time, was clear: when, where, and how will this money be used?
◎ Why it has been selling for 14 straight quarters
The answer is still not there. What is clear is that Berkshire is not buying. In this quarter, Berkshire sold $24 billion worth of stocks and bought $16 billion worth, resulting in a net sale of $8 billion. That marked 14 consecutive quarters of net selling. In other words, it has not once switched to net buying in three and a half years.
This trend cannot be explained simply as portfolio housekeeping. It reflects a judgment about the market itself. It comes amid concerns over high valuations in major U.S. stock indexes, an uncertain interest-rate path, and geopolitical variables from the Middle East all piling up at once. It can be read as a signal that no asset is meeting the “margin of safety” required by the Buffett-Abel regime.
The same pattern can be seen in external macro data. The average rate on a 30-year U.S. mortgage stood at 6.30% on April 30. That was 46 basis points below 6.76% a year earlier, but still in the mid-6% range.
The National Association of Realtors said existing-home sales in March were the lowest in nine months. While the housing market cools, asset prices remain far from attractive levels. It is a rigid market in which sellers hold out and buyers hesitate.
Berkshire’s cash hoarding aligns precisely with this macro backdrop. It is a strategy of keeping the powder dry until the asset market finds its own answer, or until the next crash or next major acquisition opportunity arrives. It is the method Warren Buffett refined over 60 years, and Abel is following the same path.
◎ Operating profit rose 18%, but missed expectations
On the numbers alone, the first quarter was not bad. Operating profit rose 18% year over year to $11.3 billion. Net income more than doubled to $10.1 billion. But it still fell short of the market consensus of $11.56 billion, based on analyst estimates compiled by FactSet. Overshadowed by its record cash, operating performance nonetheless came in slightly below expectations.
The main driver of the stronger results was insurance. Insurance underwriting profit rose 28.5% to $1.72 billion. The gain reflected a year-ago comparison distorted by California wildfire losses, along with higher premiums and improved loss ratios.
Reinsurance posted particularly strong results. Berkshire’s insurance business is not just a source of earnings; it also provides “float,” a cost-free source of funds. It is a structure in which insurance premiums collected before claims are paid can be invested to generate returns. The larger the float, the greater Berkshire’s investment capacity.
The picture was mixed even within insurance. Geico, its auto insurance subsidiary, saw profits decline. Higher marketing costs for attracting new customers and increased claim payments weighed on results.
As Progressive expanded its market share, Geico appeared to be falling behind. Under Abel’s leadership, restoring Geico has emerged as an urgent task.
◎ A small sign of change: share buybacks after 22 months
Amid the steady stream of net selling, a hint of change appeared. Berkshire resumed share repurchases after 22 months. The buyback in the first quarter totaled $234.2 million. The amount itself was not large, but the direction mattered.
Berkshire is extremely conservative when it comes to share buybacks. It follows the principle of buying only when the stock is clearly below intrinsic value. The resumption of repurchases after 22 months suggests Abel views the current share price as undervalued.
The backdrop is the stock’s recent performance. Class B shares closed at $473.01 on May 1, down 5.9% from the start of the year. Compared with the S&P 500 over the same period, the stock has underperformed relatively.
Although its market capitalization remains enormous at about $1.02 trillion, the combination of record cash and solid operating profit suggests the market is pricing it conservatively. Concerns about leadership after the Buffett era are being reflected directly in the stock price.
The message of share buybacks cuts both ways. One is shareholder return: if there is no suitable investment target, the company can buy back its own stock to raise shareholder value. The other is a signal to the market.
It tells investors that management trusts its own company enough to deploy capital into it directly. This latest repurchase serves both purposes. Still, in terms of scale, it looks more like a first step than a full statement of intent.
◎ Cracks shown in a snapshot of the U.S. economy
Berkshire’s results go beyond the performance of a single company. Because its portfolio spans insurance, railroads, energy, manufacturing, and consumer goods, Berkshire’s quarterly report is often read as a miniature of the U.S. economy. This first-quarter report revealed subtle cracks in that miniature.
BNSF, its railroad subsidiary, showed signs of recovery. Profits improved as freight volumes increased, signaling that industrial activity and cargo flows are alive.
By contrast, the homebuilding and building materials businesses saw demand weaken. Berkshire described this as a decline in customer demand due to overall economic conditions.
The slowdown in construction activity was reflected in the fact that 30-year mortgage rates remained in the mid-6% range. U.S. housing starts topped 1.6 million units annually in 2021-2022, fell to 1.42 million in 2023, and have since hovered in the 1.3 million range.
Even within the U.S., industry and housing are running at different temperatures. It is a mosaic economy in which consumption and industrial activity remain firm while housing, which is sensitive to interest rates, cools.
The Federal Reserve’s decision to cut rates three times in a row in late 2025 and then hold steady at its first 2026 meeting also reflects this mosaic. The dilemma of stimulating one sector without reigniting inflation in another is tying monetary policy in knots.
Legacy holdings such as Kraft Heinz also remain a burden. Because their fair value has stayed below book value, potential impairment losses remain latent. Berkshire did not record additional losses this quarter, implying it is waiting for a recovery in valuation, but if no recovery comes, it will eventually have to reflect those losses on the books.
◎ The Abel era: answers will come in the second quarter
What the market really wants to see is Abel’s own style. Stability is assured by carrying on Buffett’s legacy, but stability alone is not enough to justify a market capitalization of nearly $1 trillion. Some of that 586 trillion won in cash needs to start moving for the next stage of growth to take shape.
Abel has about three cards to play. The first is a major merger or acquisition. Berkshire has long expanded its portfolio by acquiring businesses beyond insurance, railroads, and energy. The second is aggressive equity investment.
When the market corrects sharply, it buys large positions in favored stocks. The third is an expansion of share buybacks. If there is no suitable investment opportunity, reducing equity can lift per-share value.
Which card Abel chooses and when he chooses it will define the Abel era. The first-quarter answer was, “Not yet.” The following quarters will gradually reveal the shape of the answer. What the market is really watching is one thing: can Berkshire survive without Warren Buffett by using Warren Buffett’s method, or will it need to find a new one? The 586 trillion won in cash is the key that will slowly unlock that answer.