Berkshire Hathaway
Float as free leverage, quality at a fair price, and 57 years of compounding — the most studied capital allocation system in history.
Latest filing on file · 2025-12-31
Insurance float and investment gains dominate; margin lines are not comparable to operating companies.
Overview
Business model and origins
Buffett's thesis was not to build a textile company — it was to use an undervalued cigar-butt asset to extract capital and redeploy it at higher rates of return than the industry could generate. The textile mills were the funding mechanism, not the business.
Origin
Berkshire traces to 1839 New England textile mills. Warren Buffett began buying shares in 1962 through his partnership, recognizing the company as a net-asset play even as the textile business deteriorated. He gained control in 1965. The textile mills ran until 1985 — Buffett has since called the acquisition his biggest mistake, because he continued to sink capital into an unwinnable industry when he should have cut and redeployed immediately. The real Berkshire story begins with the first insurance acquisition: National Indemnity in 1967, for $8.6M. Insurance float — premiums held before claims are paid — became the free leverage that funded every major acquisition for the next five decades. Charlie Munger joined as vice-chairman in 1978 and shifted Buffett from buying mediocre companies at cheap prices to buying great companies at fair prices.