The story
Berkshire Hathaway is the strangest great company in the world: a $1-trillion-plus conglomerate with no unifying product, run for sixty years from a small office in Omaha with almost no head-office staff. It owns a railroad, insurers, a candy maker, utilities, a chunk of Apple and dozens of other businesses, bound together by one thing — Warren Buffett's approach to allocating capital. It is less a company than a machine for turning cash into more cash, patiently, over decades.
The name is an accident of history. Berkshire was a dying New England textile maker when Buffett began buying its cheap shares in the 1960s; taking control in 1965 turned out to be, by his own account, a mistake he spent decades redeeming by redeploying the failing mill's cash into far better businesses. The lesson — that a bad business is a trap no matter how cheap — shaped everything after.
How it makes money
Three layers. Berkshire's insurers collect premiums now and pay claims later, leaving Buffett a vast pool of 'float' to invest in the meantime — cheap, effectively permanent capital. That capital buys whole businesses (BNSF railway, See's Candies, Berkshire Hathaway Energy) that throw off cash, and funds a concentrated portfolio of public stocks (long Coca-Cola and American Express, more recently Apple). Profits from all three are recycled into the next opportunity, with almost nothing paid out as dividends.
It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.Warren Buffett
The moat
Berkshire's advantage is structural and cultural. The insurance float gives it patient capital no ordinary investor commands. Its reputation as a permanent, hands-off owner makes it the buyer of choice for family businesses that want to sell without being gutted — deals rivals never get to see. And the decentralised culture, with subsidiary CEOs left alone to run their businesses, keeps overhead near zero. The 2025 succession — Greg Abel taking the CEO chair while Buffett stays chairman — was engineered to make that culture outlast the man.
Key people
Warren Buffett
Chairman; architect of the company
Charlie Munger
Vice-chairman, partner, intellectual foil (d. 2023)
Greg Abel
CEO from end of 2025
Ajit Jain
Vice-chairman for insurance
The playbook
Key decisions & principles
Use other people's money — patiently
Insurance float gave Berkshire cheap, permanent capital to invest. Finding a low-cost, patient funding source is often the real edge, not stock-picking skill.
Allocate capital ruthlessly
Every dollar of profit is sent wherever it earns the most, regardless of sentiment or history. Berkshire is, at bottom, a capital-allocation engine.
Buy quality and hold forever
Berkshire holds great businesses for decades, letting compounding and low turnover — and deferred taxes — do the work. Activity is the enemy of returns.
Be the buyer people trust
A reputation as a permanent, non-meddling owner brings Berkshire deals no one else is offered. Trust is a sourcing advantage.
Institutionalise the culture
The succession was planned for years so the machine runs without its architect. Great systems outlive great individuals only if you design them to.
What to read next
- The Snowball — Alice Schroeder
- Poor Charlie's Almanack — Charlie Munger
- Berkshire Hathaway Letters to Shareholders — Warren Buffett
- The Outsiders — William Thorndike
Why this matters
The strategy behind this business connects to models and moats you can study:
Frequently asked questions
What does Berkshire Hathaway actually do?
It is a holding company that owns dozens of businesses outright (from a railway to insurers to See's Candies) and a large stock portfolio, all bound together by Warren Buffett's capital-allocation discipline.
Where does Berkshire get its investment money?
Largely from insurance 'float' — premiums collected now and paid out as claims later — which gives Buffett a huge, low-cost, effectively permanent pool of capital to invest.
Who runs Berkshire after Buffett?
Greg Abel became CEO at the end of 2025, with Buffett remaining chairman — a succession planned years in advance to preserve the culture.