Explore Berkshire Hathaway’s evolution from a textile mill to a global holding company, including its core businesses, leadership transition, financial performance, stock portfolio, investment routes and key risks under Greg Abel.
The Evolution from a Textile Mill to a Trillion-Dollar Conglomerate
Berkshire Hathaway is one of the world’s largest investment holding companies, with operations spanning insurance, rail transport, energy, manufacturing and retail, alongside a substantial portfolio of listed equities. For Chinese-speaking investors, the company is both a tangible embodiment of value investing principles and a useful lens through which to examine the structure of the US real economy.
The company’s origins can be traced back to New England’s nineteenth-century textile industry. Berkshire Fine Spinning Associates and Hathaway Manufacturing Company merged in 1955, forming the predecessor of the present-day group. Warren Buffett took control of the company in 1965 and subsequently phased out its textile operations, transforming the business into a holding platform funded by insurance float. This transition established the commercial model that would define Berkshire over the following six decades: using long-term, low-cost capital generated by its insurance operations to acquire and retain operating businesses and listed company shares capable of producing stable cash flows.
Current Core Business Segments
The company’s financial statements divide its operations into two main reporting categories: Insurance and Other, and Railroad, Utilities and Energy. In the 2025 financial year, the former generated approximately US$321.7 billion in operating revenue, while the latter contributed around US$49.7 billion, bringing total operating revenue to US$371.4 billion. (Source: Berkshire Hathaway, 2025 Annual Report, Consolidated Statements of Earnings, published: 2026-02-28)
Insurance and reinsurance: This segment includes Geico motor insurance, General Re and Berkshire Hathaway Reinsurance Group, and represents the group’s principal source of insurance float.
Rail transport: BNSF Railway operates one of North America’s largest rail networks. In 2025, it generated US$8.1 billion in net cash from operating activities and distributed US$4.4 billion in dividends to its parent company.
Utilities and energy: Berkshire Hathaway Energy (BHE) operates electricity and natural gas assets and generated US$8.4 billion in net cash from operating activities in 2025.
Manufacturing, services and retail: Businesses include Precision Castparts, Lubrizol, Clayton Homes, Dairy Queen and See’s Candies.
Listed equity portfolio: Holdings are disclosed through quarterly13Ffilings. As at 31 March 2026, the portfolio had a market value of approximately US$263.1 billion.
Leadership Transition: The Beginning of the Abel Era
On 3 May 2025, Buffett announced at the annual shareholders’ meeting that he would step down as chief executive at the end of the year and recommended Vice Chairman Greg Abel as his successor. The board unanimously approved the appointment the following day, with effect from 1 January 2026. Buffett retained his position as chairman. (Source: Berkshire Hathaway, Form 8-K company announcement, published: 2025-05-04)
Leadership Profiles
Warren Buffett, an American investor who took control of Berkshire in 1965 and served as chief executive for 60 years, is now chairman and holds approximately 38% of the company’s Class A shares.
Greg Abel, a Canadian-born business executive, joined the Berkshire group in 1999 when MidAmerican Energy became part of the company. He was appointed chief executive of Berkshire Hathaway Energy in 2008, became vice chairman responsible for non-insurance operations in 2018 and was publicly confirmed as Buffett’s designated successor in 2021.
Ajit Jain, vice chairman responsible for insurance operations, has long overseen underwriting decisions within the reinsurance division.
Before the transition, Buffett made a clear statement regarding the company’s long-term durability:
“Of all the companies I can think of, it has the greatest chance of still existing a hundred years from now.”
In his first shareholder letter in 2026, Abel stated that he would preserve the culture of financial strength and capital discipline established by Buffett. He also outlined his own acquisition framework: Berkshire must understand the business and its risks, assess its future economic prospects, confirm that the management team possesses both competence and integrity, and ensure that the purchase price provides a margin of safety.
Latest Financial Results and Operating Performance
Understanding Berkshire’s financial statements requires investors to distinguish between two different measures of profit. Net earnings attributable to shareholders include unrealised changes in the market value of equity investments, which generally accepted accounting principles require to be recognised in the income statement, resulting in substantial quarterly volatility. Operating earnings exclude investment gains and losses and goodwill impairments, providing a closer indication of the underlying profitability of the group’s operating businesses. Management has long advised investors to use the latter as the primary basis for assessment.
| Financial Year | Total Operating Revenue (US$100m) | Net Earnings Attributable to Shareholders (US$100m) | Year-End Cash and Equivalents (US$100m) |
|---|---|---|---|
| 2025 | 3,714 | 670 | 3,733 |
| 2024 | 3,714 | 890 | 3,340 |
| 2023 | 3,645 | 962 | — |
Full-year operating earnings for 2025 amounted to US$44.49 billion, down from US$47.44 billion in 2024, primarily because of lower insurance underwriting profits. Fourth-quarter insurance underwriting profit fell by 54% year on year to US$1.56 billion. Full-year net earnings included US$30.74 billion in investment gains, while the company recognised US$8.26 billion in other-than-temporary impairments relating to Kraft Heinz and Occidental Petroleum. Insurance float stood at approximately US$176 billion at the end of 2025. (Source: Berkshire Hathaway, News Release, published: 2026-02-28)
The economic meaning of insurance float can be expressed as follows:
The calculation of insurance float can be written as
Insurance float = Reserve liabilities arising from premiums collected - Claims and expenses not yet paid
In the first quarter of 2026, operating earnings increased by approximately 17.7% year on year, while net earnings attributable to shareholders exceeded US$10.1 billion. Cash and equivalents rose to a record high of approximately US$397.4 billion at the end of the quarter, representing 31.7% of the company’s total assets. During the same period, the company repurchased US$234 million of its own Class B shares, marking its first share repurchase activity since the second quarter of 2024. (Source: Berkshire Hathaway, Form 10-Q first-quarter report, published: 2026-05-02)
Changes in the Equity Portfolio
As at 31 March 2026, the number of positions disclosed in Berkshire’s 13F filing had fallen from 40 in the previous quarter to 29, with the portfolio’s total market value standing at approximately US$263.1 billion. The five largest holdings collectively represented around 67% of the portfolio.
Apple (AAPL), representing approximately 22.0% of the portfolio, remained the largest holding.
American Express (AXP), representing approximately 17.4%.
Coca-Cola (KO), representing approximately 11.6%. Berkshire began investing in the company in 1988 and has never disposed of the position in full.
Bank of America (BAC), representing approximately 9.5%.
Chevron (CVX), representing approximately 6.6%, following a substantial reduction during the quarter.
Another notable move during the quarter was a substantial increase in Berkshire’s position in Alphabet (GOOGL), which rose to approximately US$15.6 billion, alongside the complete disposal of its holdings in Amazon, Domino’s Pizza and UnitedHealth. The adjustment was interpreted by the market as evidence of a change in the new management team’s approach to the technology and media sectors. In addition, the company completed its US$9.7 billion acquisition of Occidental Petroleum’s OxyChem chemicals business.
Differences Between Investment Routes and Suitable Investors
Investors can gain exposure to Berkshire through three principal routes, each of which involves material differences in capital requirements, ownership rights and fee structures.
Direct Ownership of Ordinary Shares
The company has two classes of shares listed on the New York Stock Exchange. Class A shares (BRK.A) trade at more than US$740,000 per share, have never been split and carry full voting rights. Class B shares (BRK.B) were introduced in 1996 and underwent a 50-for-1 split in 2010 as part of the BNSF acquisition. Each Class B share represents one fifteen-hundredth of the economic interest of a Class A share and carries a smaller proportion of its voting rights. In July 2026, Class B shares traded at around US$500. Holding ordinary shares gives investors shareholder status, allowing them to attend the annual shareholders’ meeting and exercise voting rights.
Contracts for Difference
ACFDis an over-the-counter derivative through which a trader and a broker settle the difference arising from changes in the price of an underlying asset, without transferring ownership of the shares. The instrument supports margin trading and both long and short positions, but it also magnifies losses and may involve overnight financing costs. CFDs are restricted or prohibited for retail clients in several jurisdictions, so investors should first confirm the applicable regulatory position in their location.
Index Funds and Exchange-Traded Funds
Berkshire is a constituent of the S&P 500 Index and is generally one of its ten largest components by market capitalisation. Holding anETFthat tracks the index provides indirect exposure to Berkshire at a relatively low weighting while diversifying the investment across the remaining constituents. This route does not provide the same return sensitivity as a concentrated holding, but it also reduces single-company risk.
| Comparison Factor | Investment Holding Company | Mutual Fund | Index Fund |
|---|---|---|---|
| Legal Status | An ordinary limited company governed by company and securities law | A collective investment scheme governed by fund regulations | A collective investment scheme that passively tracks a specified index |
| Sources of Income | Operating profits from subsidiaries, investment returns and the deployment of insurance float | Capital gains and dividends from portfolio securities | Capital gains and dividends from index constituents |
| Fee Structure | No management fee, with costs reflected in the company’s operating expenses | Management fees and performance fees charged against net asset value | Management fees are generally substantially lower than those of actively managed funds |
| Pricing Mechanism | Secondary-market share price, which may deviate from book value | Subscriptions and redemptions based on daily net asset value | Priced according to net asset value, with exchange-traded products also having a market price |
Net asset value is calculated as
Net asset value per fund unit = (Total value of fund assets - Total value of fund liabilities) ÷ Total number of fund units
This distinction has practical significance. Although Berkshire functions in a manner similar to an actively managed diversified asset portfolio, its legal structure is that of an operating company. Its share price may therefore remain above or below book value for prolonged periods. The company disclosed that its repurchase price was equivalent to 144% of book value, reflecting management’s approach to assessing intrinsic value.
Risk Factors to Include in the Assessment
Leadership transition risk. The market has long assigned a valuation premium to Buffett’s capital allocation capabilities. Whether that premium will persist following the management transition will require several full business cycles to assess.
Pressure to deploy cash. Nearly US$400 billion in cash can generate substantial interest from short-term US Treasury securities in a high-interest-rate environment. However, if interest rates decline and no large acquisition targets become available, idle capital could weigh on the group’s overall return on capital. The company has been a net seller of listed equities for 14 consecutive quarters.
Portfolio concentration. The five largest holdings account for more than two-thirds of the equity portfolio, while a single position represents more than one-fifth. Movements in individual shares can therefore have a significant effect on the portfolio’s overall value.
Insurance underwriting cycles. The marked decline in underwriting profit during 2025 illustrates that the segment is affected by catastrophe frequency, pricing cycles and conditions in the reinsurance market, rather than providing a stable source of linear growth.
Diminishing benefits of scale. As the company’s asset base expands, individual acquisitions must be sufficiently large to have a material effect on overall performance, which reduces the range of suitable targets.
Uncertainty over dividend policy. The company has never paid a regular dividend. Its growing cash balance may lead to market discussion over a possible policy change, and any adjustment would alter shareholders’ expectations regarding cash returns.
The company’s share price rose by approximately 10.9% in 2025, underperforming the S&P 500 Index’s gain of 16.4% over the same period, but still recording a tenth consecutive year of positive returns. From 1965 to 2025, the company achieved a compound annual return of approximately 19.7%, with a cumulative gain of more than 6,000,000%, compared with a dividend-inclusive cumulative return of 46,061% for the S&P 500 over the same period. (Source: Berkshire Hathaway, 2025 Shareholder Letter, published: 2026-02-28)
Frequently Asked Questions About Berkshire Hathaway
Does Buffett still participate in company decisions after stepping down?
Buffett ceased serving as chief executive on 1 January 2026 but retained his position as chairman. He previously stated publicly that Abel would have final authority over capital allocation. Buffett continues to hold approximately 38% of the Class A shares and retains substantial influence at shareholder level, although Abel now leads day-to-day operations and investment decisions.
How do the rights attached to Class A and Class B shares differ?
The economic interest of a Class B share is one fifteen-hundredth of that of a Class A share, while its proportion of voting rights is lower. Class A shares may be converted into Class B shares at the holder’s discretion, but conversion in the opposite direction is not permitted. Apart from differences in voting and conversion rights, the two share classes maintain a fixed proportional claim on the company’s assets and earnings.
Why has the company historically avoided paying dividends?
Management’s longstanding position is that reinvesting retained earnings can generate greater shareholder returns than distributing dividends. The company has paid a dividend only once, in 1967. As its cash balance continues to rise and large acquisition opportunities remain scarce, a possible change in dividend policy has become a subject of market attention, although no related decision had been made as at the first quarter of 2026.
What does the company’s nearly US$400 billion cash balance mean for shareholders?
The funds are primarily invested in short-term US Treasury securities, which can generate stable interest income at prevailing interest rates. The principal advantage is that Berkshire has the capacity to deploy capital immediately during a severe market correction. The disadvantage is that cash generally produces lower long-term returns than high-quality equity assets, and a larger balance has a more pronounced dilutive effect on the company’s overall return on capital.
What are the principal factors driving the company’s market value?
The main drivers include underwriting profits and insurance float, operating cash flow from BNSF Railway and the energy businesses, changes in the market value of the listed equity portfolio, and market expectations regarding management’s capital allocation capabilities. Because changes in the equity portfolio’s market value are recognised in earnings, quarterly net profit fluctuates with broader market movements, while operating earnings provide a clearer indication of the performance of the underlying businesses.
