Welcome back to the deep dive. Today, we've got
a well, a mountain of source material, financial
reports, articles, deep historical research,
and we're going to pull it all apart to understand
one of the world's most fascinating and frankly,
most unusual financial empires. Our mission today
is very focused. We are doing a deep dive on.
Berkshire Hathaway Inc. And you really can't
just call it a company or an investment fund.
It's so much more than that. It really is. It's
an American multinational conglomerate headquartered
famously in Omaha, Nebraska. But its reach is,
I mean, it's truly global. It touches almost
every part of the modern economy. And you have
to start with the numbers just to set the stage.
If you look at the 2024 financials, the scale
is just, well, it's almost hard to comprehend.
So what are we talking about? We're talking about
total assets of over $1 .154 trillion. Wow. That's
a number that just doesn't feel real. How do
you even put that in perspective for someone?
Well, think about it like this. $1 .15 trillion
in assets is roughly the same as the entire GDP
of a country like Mexico or Spain. So Berkshire
Hathaway is basically its own national economy.
In a very real sense, yes. And then there's the
revenue. $371 .4 billion in 2024. It consistently
ranks, what, fifth on the Fortune 500 list? Fifth,
yeah. And the employee base is massive. It supports
nearly 400 ,000 people globally, 392 ,000 to
be exact. That's the sheer physical size of this
machine. But there's another part of the scale,
a more philosophical part, and that's the share
price. The famous Class A shares, ticker BRKA.
Exactly. It has the highest per share price of
any public company on the planet. And it's not
even close. We're talking what? In August of
2024, it hit $700 ,000 for one share. For one
single share. You literally need a down payment
for a nice house just to buy one piece of this
company. So why? I mean, is that just a vanity
thing? No, not at all. It's actually a core part
of their philosophy. It's a deliberate mechanism.
The board. for decades has been completely against
stock splits. And the idea behind that is? The
idea is that the prohibitively high price acts
as a filter. It weeds out the short term speculators,
the day traders. It attracts only long term,
really committed investors, people who think
of it as joining a partnership, not just making
a trade. That makes a lot of sense. It's a very
expensive ticket to the club, but everyone in
the club is there for the long haul. Precisely.
Now, before we dive into the wild history of
how this all started, we should probably talk
about the people, the architects. Of course.
You have to start with Warren Buffett, the chairman
and CEO, and his indispensable partner for so
many years, Charlie Munger. Right. Munger was
the vice chairman from 1978 all the way until
he passed away in late 2023. They were the duo
that really built and codified this whole investment
philosophy. But the future is already in motion,
isn't it? The succession plan is one of the most
watched, but also one of the most stable in the
corporate world. Absolutely. The sources are
very clear on this. The successors have been
in place for years, working right alongside Buffett
and Munger. You have Greg Abel and Ajit Jain.
Okay, so break that down. Who does what? Greg
Abel is the vice chairman who oversees all the
non -insurance operations. That's the massive
industrial side of the business, the railroads,
the energy, the retail. And Ajit Jain? Ajit Jain
is the vice chairman for all the insurance operations.
And as we're about to discuss, insurance is the
absolute engine room of Berkshire. It's the capital
machine that fuels everything else. And the timeline
for the handover is set in stone now. It is.
Buffett announced in May of 2025 that he's going
to retire as CEO at the end of 2025. And Abel
will be the one to succeed him. So the handoff
is happening very soon, which makes this deep
dive, you know, incredibly timely. We're looking
at the legacy Abel is about to inherit. OK, let's
unpack this origin story. We're calling it the
Accidental Empire, and it's just it's a perfect
name for a company that owns massive railroads
today. Its beginnings are so humble. And frankly,
they're the result of a big mistake fueled by
pure anger. It's an incredible story. Berkshire
Hathaway didn't start as an investment vehicle.
It started in 1839 as a textile manufacturer.
A textile mill. A textile mill. The company we
know today was actually formed from a merger
in 1955 between Hathaway Manufacturing and Berkshire
Fine Spinning Associates. And at first, it was
pretty big. It had 15 plants, 12 ,000 workers,
over $120 million in revenue. But that industry
was already in steep decline in the U .S., right?
Oh, completely. Intense global competition, rising
labor costs. It was a tough business to be in.
Our sources show that by the end of the 1950s,
seven of those original 15 plants were already
shut down. Which brings us to the big question.
How on earth did Warren Buffett, who was already
a very successful investor by then, get himself
stuck running a failing business like this? Well,
the initial plan had nothing to do with running
it. It was a classic arbitrage play. Buffett
started buying up stock in 1962 at about $7 .50
a share. And his thinking was what? His thinking
was simple. The company was closing mills and
liquidating assets. He figured that eventually
they would offer to buy back his shares at a
higher price and he'd make a nice, easy profit.
A quick, low risk win. But that's not what happened.
The pivotal moment, the one that changed everything,
came in 1964. Right. Buffett had a verbal agreement
with the manager, a guy named Seabury Stanton.
He offered to sell his shares back for $11 .50
per share. Stanton agreed. Verbally. And then
the formal offer came in the mail. And then the
formal written offer arrived. And the price wasn't
$11 .50. It was $11 .37 and a half cents. An
eighth of a dollar. Twelve and a half cents.
Exactly. A tiny, almost insignificant financial
slight. But that tiny detail is what changed
financial history. Because Buffett got angry.
He got furious. He said so himself later. He
felt cheated. So instead of just taking the slightly
smaller profit and moving on, he got his back
up. He decided to go on the attack. What did
he do? He started buying more stock. Enough stock
to get a controlling interest in the company
for the specific purpose of firing Seabury Stanton.
So he got his revenge. Stanton was out in 1965.
But in the process, Buffett became the majority
owner of a dying textile business he never actually
wanted to own. And that's the great irony. That's
why we call it the accidental umpire. What's
so fascinating is Buffett's own critique of that
decision. He has said, many times that buying
that textile company was the single biggest investment
mistake he ever made. He actually put a number
on it, didn't he? He did. He calculated that
that emotional decision denied him compounded
returns of about $200 billion over the next 45
years. $200 billion lost because he was angry
about 12 .5 cents. That's an incredible lesson.
It is. It's a reminder that even the Oracle of
Omaha is human. He said if he just put that capital
directly into insurance businesses from the start,
instead of wasting it trying to revive the textile
mill, the results would have been astronomical.
So what happened to the textile business? He
slowly wound it down. The last mill finally closed
in 1985, a full two decades after he took control.
The old company had to basically die so the new
one could be born. And that transition from a
dying mill to a trillion dollar behemoth. It
really hinged on creating a completely decentralized
structure. And you see that perfectly in their
corporate headquarters. Yes, this is such a defining
part of their culture. I mean, you have this
company, number five on the Fortune 500, operating
all over the world. And its corporate headquarters
in Omaha. It's tiny. It had only 27 employees
as of... the end of 2024. 27 people to oversee
more than a trillion dollars in assets. That
just speaks to a level of trust and discipline
that you don't see anywhere else. It's extreme
decentralization. The philosophy is, you know,
it's pretty simple. We buy great companies. We
keep the great management teams in place and
we let them run their business. We only step
in on big capital allocation decisions. That
tiny headcount in Omaha is a physical manifestation
of that trust. OK, so that tiny corporate footprint
can only work if there's a rock solid philosophy
guiding how all that capital gets used. So let's
get into part two, the investment philosophy
and crucially the float engine. How did they
actually turn that failing company into a money
making machine? Well, the philosophy is often
just called value investing. But Buffett's version
is it's a lot more specific than that. His main
principle is a preference for what he calls evergreen
businesses. Evergreen. Meaning what exactly?
Meaning businesses that generate predictable
long term returns and are ideally insulated from.
massive technological or social change. He wants
stability. And that explains his famous avoidance
criteria, right? The things he won't invest in.
Exactly. Number one, he avoids companies he doesn't
fully understand. That's what kept him out of
tech for so long until Apple, which we'll get
to. Number two, he's reluctant to invest in companies
that are facing huge structural change. He doesn't
want to bet on turnarounds. He wants to bet on
stability. And the third one is a big one. He
generally avoids real property. You don't see
Berkshire buying up office towers or shopping
malls. Why not? His reasoning is all about the
economic moat, that durable competitive advantage.
Real estate, for the most part, doesn't have
one. The pricing is very precise. Management
is complex. And he believes it just doesn't offer
the same long -term competitive edge as owning
a great business or a financial asset with pricing
power. But the whole system doesn't just run
on smart decisions. It runs on a massive river
of cash that comes from the insurance subsidiaries.
This is the famous float. The float is the secret
sauce. It's the absolute key to understanding
Berkshire. Think about how insurance works. You
pay your premium up front for a promise that
the insurer might have to pay out on later. Right.
I pay my car insurance premium today, but I might
not have an accident for months or years or ever.
Exactly. And all that money, the premiums that
Berkshire's insurance companies collect but haven't
yet paid out in claims, that's the float. So
it's basically a giant interest -free loan from
all their policyholders. It is the ultimate strategic
advantage. It's a huge pool of capital that isn't
debt, so there's no interest. And it isn't equity.
So it doesn't dilute the shareholders. They get
to invest this massive float for their own benefit
until the claims come due. When did this become
the central strategy? It happened pretty early
on. The first big non -textile acquisition was
an insurance company called National Indemnity
back in 1967. That was the start. But it really
scaled up with a few key acquisitions later on.
Massively. The crown jewel is Geico. Berkshire
started buying into Geico in the 70s when it
was in trouble. By 1996, they bought the rest
of the company for $2 .3 billion. GEICO's direct
-to -consumer model is a cash -generating machine
that just feeds the float engine constantly.
And then came the even bigger reinsurance deal,
GenRe. Right, GenRe, acquired in 1998 for $22
billion, though that one came with a lesson.
He felt he overpaid for it, right? He did, and
he admitted it publicly. But that's the thing
about their model. Even a perceived overpayment
for a quality business that generates a massive,
consistent float can be absorbed by the strength
of the whole conglomerate. And speaking of paying
for things, there's a great story from the 2022
Allegheny acquisition that really shows his attitude
toward Wall Street. Oh, it's a classic. They
bought Allegheny, another insurer, for $11 .6
billion. But as part of the deal, Berkshire actually
reduced the purchase price by the exact amount
of money Allegheny had paid its investment bankers
in fees. So he was essentially saying, I'm not
paying for your bankers. Exactly. It was touted
as a perfect example of Buffett's famous disdain
for the investment banking profession. He made
sure that Berkshire shareholders weren't funding
what he saw as unnecessary middleman fees. This
is where the float engine gets really, really
interesting. Because when you have that much
low -cost capital, you can become the lender
of last resort when everyone else is panicking.
Let's talk about the financial crisis playbook.
This is where you see the true power of the float.
In 2008, when the financial world was collapsing
and credit markets were frozen solid, Berkshire
could step in. They had cash when no one else
did. The most famous example, of course, is Goldman
Sachs. September 2008, the height of the crisis.
He invested $5 billion. That was a huge vote
of confidence. But the terms were... They were
not exactly generous. Not at all. They were incredibly
favorable to Berkshire. He bought $5 billion
in preferred stock that paid a guaranteed 10
% annual interest. So that's $500 million a year
just in interest payments flowing into Berkshire.
Guaranteed. And on top of that, they got warrants.
The right to buy 43 .5 million shares of Goldman
Commons stock at a hugely discounted price of
$115 a share. So he got a massive income stream
and massive future upside. What did they end
up making on that one deal? The final profit
was immense. Just on the preferred stock, they
made about $1 .8 billion. But the real win was
on the warrants. The profit from those was estimated
at over $2 billion. So all told, you're looking
at a profit of more than $3 .8 billion. It was
a masterstroke made possible only because they
had the cash ready. And they ran basically the
same play a few years later with Bank of America.
The exact same playbook. In 2011, Bank of America
was in trouble. Berkshire swooped in, $5 billion
in preferred shares, this time paying 6 % interest,
still a sweet $300 million a year. And I assume
a boatload of warrants. A massive boatload. warrants
for 700 million common shares at just over $7
a share. By 2017, that position had generated
a profit of around $12 billion, and that's not
even counting the billions they collected in
interest payments along the way. It's the perfect
demonstration of having dry powder when everyone
else is running for the hills. Okay, so now we
move to part three, the vast portfolio itself.
This is what all that flowed and all that disciplined
thinking has built over decades. It's just the
sheer breadth of what they own is incredible.
Let's start with the fully owned subsidiaries,
the businesses Greg Abel oversees. Right. These
are the engines of stable day to day earnings.
You can really group them into a few big categories.
Infrastructure, essential manufacturing and then
consumer retail. These are the definition of
those evergreen businesses we talked about. The
infrastructure giants are. Well, they're literally
the backbone of the economy. The flagship is
BNSF Railway. They bought the rest of it in 2010
for $26 billion. At the time, that was their
biggest deal ever. And owning a railroad, that
is the ultimate economic mode, isn't it? It really
is. You can't just go out and build a competing
railroad. The barriers to entry are immense.
So BNSF has this incredible, predictable stream
of returns that's tied directly to the health
of the U .S. economy and global trade. Plus,
it's a fantastic hedge against inflation. Then
you've got the whole energy division, Berkshire
Hathaway Energy or BHE. BHE is a monster in its
own right. It owns huge utilities like Pacific
Core in the U .S. and Northern Power Grid in
the U .K. And utilities are the classic evergreen
business. People need to turn on the lights and
heat their homes no matter what the economy is
doing. And that division also includes a huge
real estate brokerage, right? Yes, Home Services
of America. It owns brands like Long & Foster.
It's another move into a stable, essential, regulated
industry. That's the theme. And you can't talk
about infrastructure and logistics without mentioning
the truck stops. Pilot Flying J. They acquired
the final piece of it in 2024 for $3 billion.
Owning a major truck stop chain is a critical
link in the supply chain. It complements BNSF
and just provides another steady stream of revenue
tied to transportation. All right. Let's shift
to manufacturing and materials, the sort of unseen
essentials that make everything else run. The
biggest one here by far is Precision Cast Parts
Core, or PCC. That was a $32 .1 billion acquisition
in 2016. It was a massive deal. And what do they
make? They make highly complex, high tolerance
metal parts for things like jet engines. It's
a classic moat company because the expertise
and regulatory approval required means there's
almost no competition. But this deal is also
a good reminder that not every swing is a home
run. It is. In 2020, Buffett came out and said
he overpaid for PCC. They ended up taking a write
down of about $10 billion. But here's the key.
The strength of the overall Berkshire machine.
is such that it can absorb a $10 billion mistake
and just keep moving. It shows how robust the
model is. What other big industrial names anchor
this part of the business? Well, you've got a
lot of companies that make the basic stuff of
industry and construction. Lubrizol, a chemical
company they bought for $9 billion. Johns Manville,
which makes insulation. Shaw Industries. Which
is the world's biggest carpet manufacturer. The
biggest, by far. Again, not a flashy business.
Insulation and carpets. But they are essential.
Shaw has this huge moat because of its scale
and distribution networks. You added MyTech,
which makes products for the building industry,
and Duracell batteries. These are all just the
fundamental building blocks of a modern economy.
Okay, let's go to the consumer side. This is
where you find some of the most famous brands.
And we have to start with See's Candies. See's
Candy is the legend. It's Buffett's favorite
case study. They bought it way back in 1972 for
just $25 million. And the return on that has
been astronomical. By 2019, that $25 million
investment had returned over $2 billion in cash
to Berkshire. That's an 8 ,000 % return. It's
the perfect example of a brand with pricing power.
Meaning people love it so much they'll pay more
for it every year. Without even blinking. They
can raise the price of a box of chocolates year
after year and people just keep buying it. That
is the definition of a moat. And it's highly
seasonal. About half its revenue comes in November
and December. It's a cash machine right when
they want it. The consumer portfolio also has
staples like Dairy Queen. Acquired in 1997 for
$585 million. And then a whole stable of home
furnishings companies. Nebraska Furniture Mart.
Jordan's, RC Willie. And we can't forget the
service sector holdings, which are quite diverse.
Very diverse. You have NetJets, which is fractional
ownership of private jets, a luxury service.
Then you have Flight Safety International, which
is a global leader in pilot training. And McLean
Company, a massive logistics and distribution
business they bought from Walmart that keeps
shelves stocked all over the country. Before
we pivot to the stocks, we should touch on the
media ventures because that shows an interesting
strategic shift. Right. They used to own a lot
of local newspapers through BH Media Group, but
Buffett saw the writing on the wall for that
industry. So in 2020, they sold most of them
to Lee Enterprises. But here's the clever part.
They also became a key lender to Lee, loaning
them over $500 million. They went from being
an owner in a declining industry to being a secured
creditor. It was a very strategic retreat. Okay,
let's pivot now to the other side of the portfolio,
the one that gets all the headlines. the major
securities holdings, funded by all that insurance
float. And this portfolio is really dominated
by one massive name, Apple. Which was a famously
late investment for Buffett in the tech space.
He always said he didn't understand tech. But
he saw Apple differently. He didn't see it as
a tech company. He saw it as a consumer products
company with the best economic moat in the world.
The stickiness of the iPhone ecosystem gives
it incredible pricing power. He started buying
in 2016. And by 2022, it was what? Over 40 %
of their entire stock portfolio. A huge concentrated
bet, which means any move they make in Apple
is a massive market event. So what does this
all mean for today? It means what they did in
2024 was seismic. They sold a huge chunk of it.
A huge chunk is an understatement. Our sources
show that in the second quarter of 2024, Berkshire
cut its Apple stake by nearly 50%. They sold
$75 .5 billion worth of stock. Wow. That's not
trimming a position. That's a major strategic
shift. It absolutely is. Yeah. And it's what
instantly ballooned their cash reserves to that
record $276 billion. It signals that they either
see much better opportunities elsewhere or...
Maybe more likely, they think Apple's valuation
has gotten a little too high. Beyond Apple, though,
the portfolio is anchored by these big financial
staples. Exactly. They own over 20 percent of
American Express, a position they've held for
decades. They own a big chunk of Bank of America,
which they got on those favorable terms we discussed.
They own a piece of Moody's ratings. And then
there was the recently revealed mystery stock.
Which turned out to be Chubb, the insurance giant.
Right. A nearly seven and a half billion dollar
stake in Chubb. These are all foundational pillars
of the global financial system. And in energy,
they're heavily concentrated in traditional oil
and gas. Very heavily. It's a bet on enduring
global demand and a hedge against inflation.
They own a big stake in Chevron and an even bigger
one, almost 27 percent in Occidental Petroleum.
The most surprising part of the portfolio for
me is the international play, the big investment
in Japan. The Sogo Shosha, the big Japanese trading
houses. This is a really interesting and rare
move outside the U .S. for them. These companies
are totally different from a U .S. conglomerate.
They're involved in everything from energy and
commodities to global logistics. So what's the
strategy there? By buying a piece of the five
largest ones, Itochu, Mitsubishi, Mitsui, and
so on Berkshire, gets this incredible diversified
exposure to global trade flows and commodity
markets that it just can't get from its U .S.
holdings. By 2023, they'd up their stakes to
over 7 % in each. It's a big bet on the future
of global supply chains. Finally, we have to
look at the sales and the regrets. Because that's
where you learn a lot. We have to talk about
the airlines. Oh, the airline saga. It was a
huge reversal for Buffett. He called the industry
a death trap for investors for years. Then in
2016, he dove in, buying stakes in four major
airlines. And then the pandemic hit. And in April
of 2020, he sold everything, liquidated the entire
position at a big loss. He just decided the pandemic
had fundamentally and permanently changed the
risk profile of that business. He's also been
very open about the Paramount Global investment
being a mistake. A huge mistake, by his own admission.
He invested $2 .6 billion in 2022 and sold it
all by May 2024 at a substantial loss. He took
full personal blame for misjudging the streaming
wars. We've also seen them sell based on geopolitics,
which is a newer factor. The TSMC sale is the
perfect example. They bought $4 billion of the
Taiwanese chipmaker in 2022 and then sold almost
all of it in the next six months, explicitly
citing the rising geopolitical tensions around
Taiwan. It shows that political risk is now a
huge part of their moat calculation. And the
portfolio is still being actively managed. It's
not static. Not at all. The last quarter of 2024,
for example, they bought over a billion dollars
of Constellation brands. But at the same time,
they sold their entire stake in Ulta Beauty after
only owning it for six months. And they got rid
of all their S &P 500 ETFs. It shows they are
constantly reevaluating and they are not afraid
to admit a mistake and get out quickly. OK. Let's
move on to part four, which is the corporate
governance and the culture, because it's just
as unique as that $700 ,000 share price. We have
to talk about the two -tier stock structure.
Right. So we've established the Class A shares
are intentionally expensive to attract long -term
investors. It's an anti -speculation tool. But
they had to create the Class B shares in 1996,
and it was to fight off copycats, right? That's
exactly it. Other investment firms started creating
these trusts. were basically designed to give
people cheap, fractional access to Berkshire.
They were trying to piggyback on the name. So
to stop that, Berkshire created its own lower
-priced option. They did. They introduced the
Class B shares, the BRKB. Originally, they were
a fraction of the price, but after a split in
2010, they're now priced at 1 ,500th of a Class
A share. It makes ownership accessible to almost
anyone. But that accessibility comes with a tradeoff
in terms of power, doesn't it? A huge tradeoff.
This is the critical part for governance. A Class
B share has only one ten thousandth of the voting
rights of a Class A share. One ten thousandth.
Wow. Yeah. It ensures that the effective voting
control stays concentrated with the long term,
high value Class A shareholders who are most
aligned with the founding philosophy. It's designed
to maintain stability. And that philosophy of
sort of. extreme frugality and long -term thinking,
it starts right at the very top with executive
pay. The contrast here is just iconic. Warren
Buffett's salary has been fixed at $100 ,000
a year for 35 years. $100 ,000 to run a trillion
-dollar company. It's unbelievable. He gets no
stock options, nothing like that. Just about
$300 ,000 a year for security services. It's
a powerful signal. And what does that signal
to everyone else? It signals that he sees his
job as a suet of capital, not an executive trying
to maximize his own pay. His wealth is tied entirely
to the performance of the stock that he owns.
It sets the cultural tone for the whole organization.
But you have to contrast that with the pay for
his successors, Greg Abel and Ajit Jain. Right.
They're compensated like the top tier global
executives they are. Abel and Jain each get a
salary of $20 million a year plus a potential
bonus. Yeah. The message is, you know, the operational
leaders are rewarded handsomely for their performance,
while the chairman maintains that symbolic minimal
pay. And this all leads us to the future. The
succession plan is now very clear and very public.
It's the biggest governance change in the company's
history. Abel and Jane were made vice chairman
in 2018. Abel was formally named the successor
in 2021. And with Buffett's announcement. The
timeline is set. Abel takes over as CEO at the
end of 2025. Finally, we can't talk about the
culture without talking about the annual shareholders
meeting. It's less a meeting and more of a festival,
right? The Woodstock for capitalists. It's completely
unique in the financial world. Over 40 ,000 people
descend on Omaha, Nebraska every year for this
thing. And the main event is a six or eight hour
Q &A session where Bucket and his team answer
questions directly from shareholders. Totally
unfiltered. It's all about transparency, but
they also make it fun. The introductory cartoon
they play every year is legendary for setting
that tone. Oh, they're brilliant. They use those
cartoons to show they don't take themselves too
seriously. Like in 2004, they had a cartoon with
Arnold Schwarzenegger as the Warrenator trying
to travel back in time to stop Berkshire from
being formed. Always sports cameos and spoofs,
right? Always. In 2007, Buffett was playing basketball
against LeBron James in the cartoon. They used
them to poke fun at their own subsidiaries, too.
In 2008, there was a cartoon where Charlie Munger
becomes president, and his solution to climate
change is for everyone to eat more Dairy Queen.
It's just a brilliant way to maintain this incredibly
approachable, almost folksy culture for what
is at its heart one of the most powerful and
disciplined financial machines ever created.
But, you know, this raises a really important
question. For all the talk about integrity in
this folksy culture, the sheer scale of this
decentralized empire means it's not immune to
controversy. We have to look at the scrutiny
some of the subsidiaries have faced. Right. When
you own hundreds of companies in highly regulated
industries, you're going to face legal and regulatory
challenges. And our sources detail a few key
ones. The first has to do with lending discrimination
at their Home Services of America division. That's
right. In 2022, a subsidiary called Trident Mortgage
Company had to pay a $20 million settlement.
This was after the Department of Justice and
the Consumer Financial Protection Bureau alleged
redlining. And what does redlining mean in this
context? The federal investigation alleged that
the company wasn't providing equal access to
mortgages in certain neighborhoods, specifically
communities with large black and Latino populations
in and around Philadelphia. It's a serious allegation
that highlights the challenge of making sure
that ethical standards are met across such a
vast, decentralized network. And there have also
been allegations of aggressive lending in the
manufactured housing business. Yes. In January
of 2025, the CFPB sued another Berkshire subsidiary,
Vanderbilt Mortgage and Finance. The lawsuit
alleges that they were using aggressive tactics
to push borrowers into loans they couldn't actually
afford. With pretty severe consequences for those
borrowers. According to the allegations, yes.
The result was significant financial hardship,
excessive fees, and in some cases, people losing
their homes or going into bankruptcy. These kinds
of issues really challenged that clean, conservative
image of Berkshire. And finally, let's touch
on the environmental concerns around the energy
division, BHE. A Reuters investigation in 2025
really focused in on this. While BHE has invested
a lot in renewables, the report was very critical
of the fact that it still operates several of
the most polluting coal -fired power plants in
the entire country. And it's the timeline for
those plants that's the real point of contention,
isn't it? It is. Critics point out that BHE plans
to keep some of these high -emission coal plants
running until at least 2049. That very long timeline
raises serious environmental and public health
concerns that seem to run counter to the company's
image as a long -term steward of capital. These
controversies are a really necessary counterpoint.
They show just how hard it is to manage a conglomerate
of this size, where the actions of one subsidiary
can have these major national repercussions.
You absolutely do. And speaking of scale and
strategic choices, this all brings us back to
the biggest financial signal the company is sending
right now. That massive pile of cash. Right.
Let's revisit that number because it's just astounding.
As of mid 2025, the sources show Berkshire was
holding $344 billion in cash and treasury bills.
$344 billion. That is by far the largest cash
position of any public company in the U .S. And
that huge $75 billion sale of Apple stock is
a big reason why. It sends a pretty clear signal
that finding big, high quality businesses to
buy at what they can What a deep dive this has
been. I mean, we've traced the entire story of
Berkshire Hathaway from what Warren Buffett himself
called a monumentally stupid decision. All over
12 and a half cents. Exactly. A mistake born
of anger that accidentally forced the creation
of this trillion dollar conglomerate we see today.
We've seen how that accidental empire was built,
not just on brilliant stock picks, but on this
disciplined philosophy fueled by the massive
float engine. from the insurance businesses.
That's what allowed them to be the lender of
last resort in a crisis. And we explore the sheer
breadth of what they own, from things like carpets
and insulation to entire railroads and power
grids. And then the dynamic stock portfolio,
which has been defined recently by that massive
strategic sale of Apple stock. And all of this
is happening at this critical moment of transition.
The governance is about to change for the first
time in decades, with Greg Abel set to take over
from Buffett at the end of 2025. He's inheriting
a perfect machine that is just, it's drowning
in cash. He is. And that brings us to our final
provocative thought for you to think about. That
record cash reserve, that $344 billion, it sets
an unbelievably high bar for future acquisitions.
The question isn't just how Greg Abel will use
it. It's about the opportunity cost of just letting
it sit there. Does that cash become the ultimate
strategic weapon if the market goes into another
panic, giving him incredible power? Or does the
drag on returns become so great that shareholders
start demanding he spend it, maybe forcing him
to lower the very standards that made the empire
so successful in the first place? It is the ultimate
inheritance, and it's the ultimate challenge
for the next leader of the accidental empire.