This ‘Value Investing’ sub does not understand Berkshire Hathaway in the most basic sense..
u/denialof_ ·
Reddit — r/ValueInvesting
· June 04, 2026 at 15:21
· ⬆ 21 pts
· 💬 13 comments
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AI Summary
Summary
Author defends Berkshire Hathaway against critics who focus too narrowly on its public stock portfolio, highlighting that the operating businesses generate ~$45B in annual profits independent of investment returns.
Thesis: The market misunderstands Berkshire’s durable earnings power and insurance float advantage, leading to undervaluation; the company can compound sustainably without relying on Buffett’s stock picks.
Quality assessment: Reasoned opinion with supporting data (operating profit figure), but lacks detailed financial breakdown or valuation model; more of a conviction-based commentary than rigorous DD.
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Berkshire Hathaway is reduced more recently into a discussion about their public market investments as if that is the only thing the company does and that their returns are driven exclusively by how well they pick stocks over a 1-5 year period.
This is a fundamental misunderstanding of the business model and is exposing the fact that we are in a market dominated by enthusiasm and short term profit chasing vs long-term investors focused on long term sustainably compounding earnings.
If Berkshire’s investment portfolio went to 0 overnight they are left with operating businesses that produce $45B of profits per year. Or said another way they produce enough profit EVERY YEAR to buy companies like NASDAQ, Cheniere, etc in full (assume no premium for arguments sake). That earning power is in the top echelon of companies even if they had no investment portfolio and it’s supercharged by the ability to reinvest at incredibly low capital rates due to their insurance float.
People who are hating on Berkshire are doing so because of recent price performance and an inability to not chase the shiny new AI toy. The good thing about investing is you can take a balanced approach and own both. When the leadership of the market shifts Berkshire will continue to compound and reward long term owners. Buffet has built a company that is not reliant on him and his stock picking to continue to grow at or above GDP.
Berkshire’s operating businesses produce ~$45B in annual earnings, placing it among the top profit-generating companies even if its entire investment portfolio were wiped out. Market fixates on short-term stock picking performance, ignoring the stable, self-funding earnings stream and insurance float that allows low-cost capital reinvestment – this creates a mispricing opportunity for long-term investors. BRK.B is a compounding machine with intrinsic value far above current market perception, suitable for patient investors seeking steady, above-GDP growth. Prolonged market enthusiasm for high-growth tech/AI stocks could keep BRK.B underperforming; a sharp economic downturn might pressure operating earnings; succession risk if Warren Buffett’s presence is overvalued by markets.