“ Summation

Berkshire's ownership structure is built for precisely the thing they are not yet doing. Permanent capital, no fund life, no forced sellers, no quarterly guidance, and an estate plan that distributes Buffett's shares over ten years rather than dumping them. That is the ideal structure for assets measured in decades.

Instead, they hold T-bills, making them bloated and comfortable. They are a trillion-dollar enterprise whose last three acquisitions were a chemicals plant, a tract homebuilder and a rat poison maker. Greg Abel took over a business that sells ice cream, candy and furniture, runs a railroad and parks a third of its value in cash or cash equivalents. That is not bad business. It's one punching below its weight.

In the AI juiced information age, every balance sheet is screened by thousands of algorithms before sunrise. The cheap, boring, moated businesses Berkshire built its reputation on have mostly been found. The strategy may still work but it doesn’t scale to $365 billion. Abel affirmed that about the Bell Laboratories acquisition, "we only wish it had been ten times bigger."

The cash is a real risk. T-bills yield ca. 4.2% vs. 3.4% inflation. After corporate tax, it becomes a near zero real return. Behind that sits tens of trillion dollars in deficits that keep growing. The world's central banks are quietly hedging against this risk, buying 50 metric tonnes of gold per month. Berkshire holds more short-term Treasury bills than the Federal Reserve. Yet Warren Buffett and the late Charlie Munger publicly dismissed gold as a do-nothing asset that you dig up, move and bury in the ground.

Brookfield (BN) and Cameco (CCJ) bought Westinghouse for $8.2 billion in 2023 and are floating it just over $50 billion. Cash does not just erode against goods. It also erodes against the type of assets Berkshire seeks to acquire.

What makes this frustrating is that Berkshire already owns every piece of the solution, needed to take American energy into the future: four regulated utilities, transmission, logistics (railroad), a geothermal fleet running since 1982 and, most importantly, a CEO who started his career in it. Then there is an insurance arm that can underwrite its own construction risk. $322 billion that could fund a ten-unit reactor program or more if done at scale. Berkshire lazily bought a suburban tract homebuilder. The same capital could restore entire blocks of Baltimore, Camden and the South Side of Chicago. The housing stock is already there. The land is cheap and the shortage is acute. That is a harder problem to solve than building cul-de-sacs in suburbs. It is also a more impactful one for the American middle class.

Column 2 (operating businesses) is where the value sits, with an 11 PE and the investments counted at face value. That is half the headline multiple. However, the whole company is not cheap. At $502, the price sits above my fair value range. Hence, a hold and not a buy. That rating holds only if management does something with the cash. A company sitting on idle cash in a debasing currency is not conservative. It's long-term risk for those holding the stock for retirement, college or ballast against an uncertain future. The decay is slow enough that nobody notices until it has already happened, like the US dollar since the 1970s.

America needs Berkshire to build strategic energy generation, and Berkshire needs to do more.“ seekingalpha.com - Berkshire hathaway the abel era needs more than continuity