Berkshire Hathaway

Berkshire’s composite moat rests on several durable sources. Insurance float of approximately 176 billion dollars at September 30, 2025 provides extremely low-cost, often costless, long-duration funding that scales with underwriting profitability across GEICO, Berkshire Hathaway Primary, and Reinsurance.

The group generated pre-tax underwriting gains in Q3 and year to date, while float increased from year end 2024. GEICO’s loss ratio has been sub-75% for seven consecutive quarters, though acquisition expenses are currently rising as the company pushes for new business. This cost-of-capital advantage is both large and persistent.

BNSF is an efficient-scale network business where replication is uneconomic. Third-quarter 2025 showed modest volume and revenue growth with improving operating ratio, indicating pricing and cost control on a network that is extremely difficult to duplicate.

Berkshire Hathaway Energy’s regulated utilities own large monopolistic service territories with tariff structures that allow returns on rate base. The rate-base growth opportunity from grid and renewables remains robust industry-wide, though BHE’s PacifiCorp faces wildfire liabilities that could pressure credit and liquidity.

Intangible and cultural moats include a decentralized structure, conservative underwriting discipline, and a reputation that attracts high-quality sellers. Cash and investment scale lower cost of capital and enable opportunistic deployment.

Weighting efficient scale and cost advantage most heavily, we assess the moat as wide and resilient but trim the score for BHE wildfire exposure and the inherent cyclicality in rail and insurance.

Pricing power is mixed but adequate. In insurance, a prolonged hard market supports rate adequacy in primary and reinsurance, and GEICO has sustained strong loss ratios after significant rate increases but is currently accepting higher acquisition costs to restart growth.

In regulated utilities, allowed returns on rate base provide an institutionalized pricing mechanism, effectively passing through prudent investments to customers over time. BNSF typically achieves core price increases above inflation over cycles, but fuel surcharge dynamics and mix can offset in any given period.

Overall we see solid pricing power in aggregate, with the strongest visibility at BHE and steady, cycle-aware pricing at BNSF and the insurance units.

Predictability is stronger than most conglomerates due to diversification and recurring regulated earnings, but it is not at the level of top-tier tollbooth franchises because insurance underwriting and investment marks can create volatility.

Still, Berkshire’s operating earnings have trended higher, with TTM operating profit of about 48.8 billion dollars through Q3 2025 and a strong Q3 print of 13.5 billion dollars. BNSF volumes and revenue are steady, and utility returns are regulated.

The key wildcard for near-term predictability is the interest rate path, because the company’s very large Treasury bill position materially boosts reported operating earnings at today’s yields and will decline if rates fall. Barron’s recently estimated several billion dollars of annual interest income at risk if the Fed cuts aggressively.

We factor this into our score. Geographic and sector diversification mitigate single-country or single-product risk.

Berkshire’s balance sheet is exceptionally strong. As of September 30, 2025, cash, cash equivalents and U.S. Treasury bills net of payables were approximately 354.3 billion dollars, and investments in equity and fixed maturity securities were about 301.2 billion dollars.

Consolidated borrowings were roughly 127.2 billion dollars against shareholders’ equity of about 698 billion dollars. The company made no share repurchases in the first nine months of 2025, preserving liquidity. This level of redundancy and flexibility provides substantial resilience to shocks and optionality for future deployment.

We deduct a small amount for potential utility wildfire liabilities and associated liquidity needs at PacifiCorp but overall financial strength remains near the top of our scale.

Berkshire’s long record of high-quality deployment is well documented: acquisitions when available at attractive terms, measured use of buybacks only below conservative intrinsic value, and avoidance of dividends to maximize internal compounding.

With equity markets elevated, Berkshire has been a net seller for multiple quarters and has not repurchased shares for five straight quarters, allowing the cash pile to build while awaiting better opportunities.

Recent portfolio actions include reducing Apple and initiating a new Alphabet stake of roughly 4.3 billion dollars in Q3 2025. The company also completed the purchase of the remaining stake in Berkshire Hathaway Energy in 2024. We see discipline, patience, and tax-aware decisions, with a thoughtful approach to successor-era capital allocation under Greg Abel.

Score slightly tempered because the opportunity set has limited large acquisitions and because interest rate normalization could reduce cash earnings.

Warren Buffett will step down as CEO at year end 2025, with Greg Abel taking the role on January 1, 2026. Abel has overseen non-insurance operations for years and is widely regarded as a capable operator aligned with Berkshire’s culture. Ajit Jain continues to lead insurance.

Buffett will remain as chairman and major shareholder, helping ensure cultural continuity. The succession plan is long signaled and orderly, yet we prudently discount the score for the loss of Buffett’s day-to-day capital allocation judgment and for questions around BHE’s wildfire legacy.

On balance, Berkshire remains one of the best-aligned and most shareholder-friendly stewardship teams in global markets.