Sanmit Amin
7 min read
Berkshire Hathaway Inc. (NYSE:BRK.B) returned 10.56% during the last six months, as of October 15. This compares to a 21.5% return for the Insider Monkey Billionaire Index and 15.74% for the State Street SPDR S&P 500 ETF Trust.
Berkshire Hathaway was never just Warren Buffett’s investment portfolio. It was a collection of businesses that generated cash, an insurance operation that provided investable funds, and a headquarters that could move capital wherever it saw the best opportunity. That distinction matters now that Greg Abel has taken over as CEO.
Abel has already started putting Berkshire’s enormous cash reserves to work. The company invested about $10 billion in Alphabet during the second quarter of 2026 and repurchased roughly $4.5 billion of its own shares. It also acquired homebuilder Taylor Morrison for approximately $6.8 billion. These are meaningful moves, but the harder task is ensuring that Berkshire continues to allocate capital well over the next decade.
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Berkshire’s advantage goes beyond picking stocks
One of the less appreciated parts of Berkshire’s model is that it does not have to rely on the stock market to generate investable cash. Its operating businesses produce cash, while its insurance operations collect premiums before paying claims. That insurance float, which stood at approximately $177.5 billion at the end of June, gives Berkshire a substantial pool of money to invest. The float is not free of risk because claims must eventually be paid, but it provides a source of capital that many investment firms simply do not have.
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Berkshire also benefits from its decentralized structure. Its businesses can operate without every decision going through Omaha, while headquarters decides how to allocate the cash they generate. That creates a different kind of advantage from running a conventional conglomerate. Berkshire does not need every subsidiary to grow at the same rate. It needs the overall collection of businesses to generate cash that management can put to increasingly productive use.
The challenge is that this model becomes harder to operate as the company grows. A $1 billion investment can transform a smaller business, but it barely moves the needle at Berkshire. Its capital allocation decisions must be large enough to affect the whole company, which rules out many otherwise attractive opportunities.
