Berkshire Hathaway Inc.: 2025 Capital Allocation and Portfolio Shift

A decisive quarter: selling into strength while holding a record cash war chest#

In Q2 2025 Berkshire Hathaway executed a measurable portfolio recalibration: the firm sold roughly $6.9 billion of public-equity positions and bought about $3.9 billion, leaving it a net seller of approximately $3.0 billion that quarter — a continuation of an extended net-sale streak documented in public filings and 13F reporting. At the same time Berkshire closed FY2024 with $334.2B in cash and short-term investments on the balance sheet, a level that creates tension between patient capital preservation and the opportunity cost of not deploying that liquidity into large acquisitions or buybacks. These moves arrived as Warren E. Buffett prepared to step down at the end of 2025 and amid concentrated press coverage of new stakes (notably UnitedHealth) and trims (notably Apple and Bank of America) in Q2 2025 Quiver Quant, S&P Global Market Intelligence.

These two facts — net selling in the quarter and a very large cash buffer — frame Berkshire’s strategic posture in mid‑2025. The company is not abandoning its long-term investment ethos, but it is visibly prioritizing valuation discipline and optionality. The remainder of this analysis connects those portfolio decisions to Berkshire’s FY2024 results, balance-sheet flexibility, and capital-allocation history to explain what the Q2 moves mean for the company’s risk profile and strategic runway.

FY2024 financial snapshot and what changed year-over-year#

Berkshire’s FY2024 income statement shows $371.43B in revenue and $89.00B in net income, producing a net margin of 23.96% for the year (calculated as $89.00B / $371.43B). Revenue grew modestly from FY2023 — a +1.91% change year-over-year — while reported net income declined -7.51% versus the prior year, reflecting earnings volatility driven primarily by investment gains/losses and hands-on operating performance across its insurance, utility, manufacturing and retail businesses (company filings, FY2024 accepted 2025-02-24).

On the balance sheet Berkshire reported total assets of $1,153.88B and total stockholders’ equity of $649.37B at year-end 2024. Using FY2024 net income, the simple FY2024 return-on-equity computes to +13.71% (i.e., $89.00B / $649.37B) — materially above the TTM ROE figure reported in aggregated metrics, which is 9.68%, illustrating how multi-period TTM metrics can differ from single fiscal-year snapshots. Berkshire’s reported total debt of $143.53B produces a FY2024 debt-to-equity ratio of 22.11% (calculated), slightly higher than the TTM debt-to-equity metric of ~19.02% included in provider aggregates. Those discrepancies arise from different denominators (TTM versus fiscal-year snapshots) and timing of portfolio valuation inputs; they matter for interpreting leverage trends.

Free cash flow tells a sharper story: Berkshire’s free cash flow fell from $29.79B in FY2023 to $11.62B in FY2024, a -61.02% decline (calculated from the two-year free cash flow figures), driven by lower net cash from operating activities and higher capital expenditure and working-capital absorption in 2024. This drop in FCF is important context for both the firm’s decision to remain liquid and its selective public-equity selling.

Income statement and balance-sheet trends (2021–2024)#

Below are the four-year income statement and balance-sheet extracts that underpin the analysis above and that we used for independent calculations. All figures are presented as reported in company filings (FY year-end).

These tables show a steady expansion of total assets and equity over four years, plus a sharp increase in liquid investments between 2023 and 2024 (from $167.6B to $334.2B), reflecting both retained earnings and repositioning of the investment portfolio. The magnitude of the cash and short‑term investments line is central to Berkshire’s tactical choices in 2025.

Portfolio moves in Q2 2025: what changed and why it matters#

The quarter’s most visible actions were the trims to [AAPL] and Bank of America and the initiation of a meaningful stake in UnitedHealth ([UNH]). Public filings and 13F activity indicate Berkshire sold about 20 million Apple shares (a roughly 6–7% reduction of that position) and trimmed roughly 26.3 million Bank of America shares, while buying approximately 5 million UnitedHealth shares and adding to homebuilder and industrial positions. Reporters and filings summarized the quarter as roughly $6.9B of sales versus $3.9B of buys, a net sale of about $3.0B Quiver Quant, Benzinga.

The logic implied by the transactions is valuation and risk management. Apple remains the single largest equity holding in percentage and dollar terms even after the trim, but the sale reduced exposure to a high‑multiple, large-cap tech weight in favor of sectors trading at lower multiples or with more cyclical downside protection. Bank of America trims followed a cautious stance toward concentrated bank exposure amid opaque future credit/regulatory outcomes. By contrast, the UNH entry — estimated at about $1.57B — was a classic buy-the-dip opportunity reportedly driven by the stock’s material YTD drawdown and the secular demand characteristics of healthcare services S&P Global Market Intelligence.

Capital allocation: cash, buybacks and acquisitions#

Berkshire’s capital choices in 2024 and Q2 2025 show an emphasis on liquidity and optionality. The company repurchased a modest $2.92B of stock in FY2024 (versus $9.17B repurchased in 2023), and paid no dividends. Acquisitions and acquisitions net were modest in 2024 (about -$0.396B acquisitions net reported in cash flow), while capital expenditures rose to $18.98B (investments in property, plant & equipment). The net effect: Berkshire is holding more cash and buying fewer shares than in recent prior years, choosing patience over aggressive leverage or buyback programs.

From a capital-allocation lens this is consistent with Berkshire’s historical playbook: keep substantial liquidity to move decisively when suitably large, mispriced opportunities appear. That approach trades short-term shareholder-return measures (dividends and large buybacks) for long-duration optionality. The risk, of course, is an extended opportunity cost if large, attractive targets never materialize.

Earnings quality and cash-generation dynamics#

There is a divergence between reported net income and cash flow quality in FY2024. Reported net income of $89.00B contrasts with net cash provided by operating activities of $30.59B and free cash flow of $11.62B. That gap highlights the role of non‑cash investment returns and valuation-driven earnings which can swing materially from year to year. Berkshire’s insurance float and investment-income profile make reported net income volatile. Therefore, operating cash flow and free cash flow are more reliable gauges of the company’s capacity to fund acquisitions or repurchases without tapping the sizable cash hoard.

Recent quarterly EPS surprises show mixed execution: the August 2025 quarter beat consensus (actual EPS $5.73 vs estimate $5.04, a +13.69% surprise), while the May 2025 quarter missed slightly (actual $4.47 vs estimate $4.63, a -3.49% miss). These patterns underscore cohort-level volatility in quarterly earnings but do not change the broader cash-centric posture [company earnings releases].

Strategic interpretation: succession, sector tilt and managerial continuity#

The timing of these portfolio moves during Buffett’s transition to Greg Abel invites questions about continuity and emphasis. The Q2 activity — trimming high‑multiple tech and large bank stakes while adding positions in healthcare, housing and industrials — reads as a valuation-first, real-economy tilt rather than a doctrinal shift. That pattern aligns with Abel’s background overseeing non-insurance operations and suggests a possible modest reweight toward operating businesses and tangible-asset sectors under new leadership, while retaining core Berkshire characteristics: conservative balance-sheet management, insurance float leveraging and opportunistic deployment of cash.

This is not a revolution. Apple remains a large holding; the portfolio still contains heavy exposures to insurance, utilities, manufacturing and selected public equities. What changes more is emphasis: favoring durable cash flows and asset-backed businesses over extended multiple growth exposures.

Risks, catalysts and what to watch next#

Key risks are straightforward. First, reducing stakes in companies like [AAPL] blunts Berkshire’s participation in any tech-led market rally. Second, the newly initiated UNH position carries regulatory and operational execution risks that could deepen if the company faces persistent headwinds. Third, the massive cash position is an economic double-edged sword: it provides optionality but also creates an opportunity cost and a market narrative that Berkshire is waiting for better prices.

Near-term catalysts that would change execution include a material market pullback across large-cap stocks (which would likely trigger meaningful redeployment), a large acquisition target priced attractively for Berkshire’s scale, or clear signs that the new management will prefer more aggressive buybacks or dividends. Monitor subsequent 13F filings for evidence that Berkshire flips from net seller to net buyer, and watch quarterly cash and repurchase disclosures for any signal of changed deployment behavior.

What this means for investors#

Berkshire in mid‑2025 is acting like a steward managing optionality. The company’s balance sheet capacity is unusually large ($334.2B cash & short-term investments), and management has elected to be net sellers in the public-equity market while selectively adding to sectors deemed more conservatively valued. For stakeholders, the message is: Berkshire is preserving firepower, tightening exposure to perceived valuation risk, and maintaining the flexibility to act on large, idiosyncratic opportunities consistent with its history.

In operational terms, investors should prioritize three signals: (1) the pace of change in free cash flow and operating cash flow versus reported net income; (2) the evolution of the cash & short-term investments line (are we seeing a drawdown into acquisitions or buybacks?); and (3) 13F trends showing whether Berkshire’s Q2 net-seller posture persists or reverses into net buying.

Key takeaways#

Berkshire Hathaway’s behavior in 2024–Q2 2025 is defined by a large cash cushion, valuation-driven public-equity reweights, and continued conservative capital stewardship. The headline numbers to remember are $371.43B revenue and $89.00B net income for FY2024; $334.2B in cash & short-term investments at year-end 2024; a -61.02% decline in free cash flow from 2023 to 2024; and Q2 2025 net public-equity sales of roughly $3.0B (sales $6.9B vs buys $3.9B) reported in 13F activity Quiver Quant, Benzinga.

Conclusion: a cautious pivot, anchored by balance-sheet optionality#

Berkshire’s Q2 2025 activity is best read as a cautious pivot: modest portfolio reweights aimed at lowering valuation risk and increasing exposure to sectors seen as durable or countercyclical, executed while holding record levels of liquidity. The company’s core advantage — size, insurance float, and an established acquisition playbook — remains intact. The critical watch items going forward are whether management converts cash into large-scale, value-creating deployments and whether the portfolio repositioning under Greg Abel preserves Berkshire’s historical discipline.

(Selected reporting on the Q2 2025 portfolio changes and new positions can be found in the contemporaneous coverage from Quiver Quant, Benzinga and S&P Global Market Intelligence cited above.)