THE ORACLE’S FINAL ARCHITECTURE
Inside Warren Buffett’s Two-Year Project to Rebuild Berkshire Hathaway for a World Without Warren Buffett
By Shanaka Anslem Perera
December 31, 2025
I. THE MOMENT EVERYTHING CHANGED
The confession came at 3:47 in the afternoon, buried in the third hour of a shareholder meeting that most analysts had already mentally departed. Warren Buffett, ninety-four years old, white-haired and unhurried, was explaining why he had sold the majority of his Apple position. The number he cited seemed almost deliberately designed to deflect attention from its true significance.
“We are paying a 21% federal rate on the gains we’re taking in Apple,” he said, his voice carrying that familiar Midwestern flatness that has lulled generations of investors into underestimating what they were hearing. “And that rate was 35% not too long ago.”
The financial press, gathered in Omaha’s CHI Health Center on that May afternoon of 2025, dutifully recorded this as the story: tax optimization. The Oracle of Omaha, they reported, was simply locking in gains before potential rate increases. Prudent. Sensible. Quintessentially Buffett.
They missed what was actually happening.
What Buffett did not say, what the shareholder meeting transcript does not capture, what no analyst has adequately synthesized until this moment, is that the Apple liquidation was merely the most visible component of a comprehensive portfolio reconstruction that had consumed twenty-four months of his final years at the helm. The tax explanation was true but radically insufficient, like describing the construction of a cathedral as an exercise in stone placement.
Between the third quarter of 2023 and the third quarter of 2025, Warren Buffett systematically dismantled and rebuilt the balance sheet of the world’s most unusual company. He liquidated 677 million shares of Apple. He accumulated $381.7 billion in cash and Treasury securities, a sum so large it represents approximately five percent of the entire United States short-term government debt market. He constructed a leveraged carry trade in Japan that generates $677 million in annual profit without requiring a single decision from anyone at Berkshire headquarters. And he accepted, without public resistance, the departure of Todd Combs, the lieutenant many believed would carry forward the stock-picking tradition that made Berkshire famous.
Tomorrow, January 1, 2026, Greg Abel assumes the title of Chief Executive Officer. The era of the Oracle ends. But the architecture Buffett leaves behind tells a story more revealing than six decades of shareholder letters: a story of deliberate preparation for the one problem that no amount of investment genius can solve, the problem of what happens when the genius departs.
This is the first complete account of that architecture. It is based on forensic examination of regulatory filings, verification of every material claim against primary sources, and adversarial stress-testing against the most hostile analytical frameworks available. The conclusions will reshape how institutional investors understand both this specific transition and the broader question of founder succession in capital-intensive enterprises.
The stakes could not be higher. Berkshire Hathaway commands a market capitalization exceeding one trillion dollars. Its insurance float funds the federal government at scale. Its railroad moves the goods that stock the shelves of Middle America. Its utilities power the grids of sixteen states. The transition of this institution from its founder to his chosen successor represents a test case that will be studied for decades, regardless of outcome.
And for the first time, we can see exactly what Buffett built for Abel to inherit. Not wealth. Not wisdom, though he has shared that freely. He built infrastructure. A balance sheet engineered to survive anything short of the collapse of the American monetary system. A portfolio stripped of the concentration risks that have destroyed lesser successors. An income stream from Japan that compounds automatically, requiring no intervention, generating no headlines, demanding no genius.
The Oracle has left the building. But he left the vault door open. He left a map. And he left something else, something the financial press has entirely failed to recognize: permission. Permission for his successor to be someone different. Permission for Berkshire to become something different. Permission for the next sixty years to look nothing like the last sixty years.
This is the story of how that permission was constructed. It begins with the most important trade of the decade, executed in plain sight while everyone watched without seeing.
II. THE ANATOMY OF THE GREAT DE-CONCENTRATION
The Apple position that Warren Buffett liquidated between 2023 and 2025 was not merely large. It was historically unprecedented in its concentration, representing the most aggressive single-security bet ever made by an institutional investor of comparable scale. To understand what Buffett destroyed, and why he destroyed it, requires grasping the magnitude of what existed before the demolition began.
At its peak, Berkshire Hathaway owned approximately 905 million shares of Apple Inc. The position was worth, depending on the day’s closing price, somewhere between $170 billion and $190 billion. This single holding constituted more than fifty percent of Berkshire’s entire equity portfolio, a concentration that would have triggered immediate regulatory intervention at any mutual fund, any pension fund, any investment vehicle operating under normal prudential constraints. Berkshire operated under no such constraints. The position was legal. It was also, by any conventional measure of portfolio construction, insane.
The acquisition had occurred in stages between 2016 and 2018, years when Apple traded at multiples that now seem almost quaint. Buffett’s average cost basis was approximately $40 per share. By 2024, Apple traded above $200, a quintupling that had generated paper gains exceeding $130 billion. The position alone, separate from everything else Berkshire owned, was worth more than the total market capitalization of all but approximately twenty-five companies in the world.
And then Buffett began to sell.
The cadence of the liquidation, visible only through quarterly 13F filings at the Securities and Exchange Commission, reveals a methodology as deliberate as any acquisition strategy the Oracle ever deployed. In the fourth quarter of 2023, Berkshire sold approximately 10 million shares, representing a 1.1% reduction in the position. This was the pilot phase: a test of market absorption capacity, a calibration of execution algorithms, an establishment of legal and accounting frameworks for what would follow. The financial press, accustomed to Buffett’s buy-and-hold rhetoric, barely noticed.
The first quarter of 2024 brought acceleration: a 12.8% reduction, approximately 116 million shares liquidated. Still, the position remained dominant. Still, analysts interpreted the selling as routine rebalancing, the kind of position management any large investor might undertake for liquidity purposes or to fund other opportunities. The consensus view held that Buffett was trimming, not evacuating.
Then came the second quarter of 2024, and the consensus shattered.
In those three months, Berkshire sold 390 million shares of Apple, a 49.3% reduction in its remaining position. The liquidation generated proceeds exceeding $80 billion. It was not trimming. It was not rebalancing. It was the largest single-quarter equity liquidation in the history of institutional investing, executed by the most famous buy-and-hold investor of all time, in a company he had publicly described as one of the four pillars of Berkshire’s permanent holdings.
The market struggled to process what it was seeing. Apple’s share price, remarkably, held relatively steady, a testament to the liquidity of the world’s most valuable company and to Berkshire’s execution sophistication. But the questions that followed required answers that Buffett seemed reluctant to provide in full.
At the May 2024 shareholder meeting, he offered the tax explanation. Corporate capital gains rates were 21%. They might rise. Locking in gains at current rates represented prudent fiscal management. This was true. The estimated tax bill on 2024 sales exceeded $20 billion, a figure that would have been $7 billion higher under pre-2017 rate structures. Waiting to sell under a potential future administration’s higher rates would cost shareholders real money. Buffett was doing what Buffett always does: thinking about taxes, thinking about shareholder value, thinking three moves ahead.
But the tax explanation, however accurate, did not explain the scale. Buffett has held Coca-Cola for thirty-seven years through every tax regime change in modern American history. He has held American Express for thirty-one years. He held the Washington Post company for four decades. The man who declared his favorite holding period to be “forever” does not liquidate three-quarters of a position over eight quarters because marginal tax rates might increase by a few percentage points.
The true explanation requires looking not at what Buffett was selling, but at what he was purchasing with the proceeds. And what he was purchasing, with extraordinary single-mindedness, was time.
Time for Greg Abel.
Consider the scenario Buffett was engineering against. It is January 2026. Abel has been CEO for one month. The equity markets, which have been elevated by artificial intelligence enthusiasm and monetary policy accommodation, experience a correction of the magnitude that occurs, on average, once per decade. Apple, trading at thirty-four times earnings, falls thirty percent. The remaining Berkshire position, had it stayed at peak size, would lose $57 billion in market value in a matter of weeks.
Now consider the headlines that would follow. “New Berkshire CEO Presides Over Largest Loss in Company History.” “Abel’s First Month: $57 Billion Erased.” “Post-Buffett Era Begins With Catastrophe.” The commentary would be merciless. The comparisons to the GE transition, to every failed founder succession in corporate history, would be immediate and pervasive. Abel’s credibility would be permanently damaged before he had made a single consequential decision. The narrative of Berkshire’s decline would calcify into consensus before any evidence could accumulate to contradict it.
Buffett, whose entire career has been an exercise in understanding how narratives shape asset prices, was not going to let that happen.
By reducing the Apple position to 238 million shares, he transformed it from a needle-mover to a manageable holding. A thirty percent correction now costs Berkshire approximately $20 billion in paper value, painful but survivable, lost in the noise of a trillion-dollar market capitalization. Abel inherits exposure to Apple’s upside without existential vulnerability to its downside. He inherits optionality, not obligation. He inherits freedom to make his own decisions, unburdened by the accumulated convictions of his predecessor.
This is what Buffett bought with his $130 billion in liquidation proceeds. Not Treasury bills, though that is where the proceeds went. He bought breathing room. He bought narrative control. He bought the one commodity that no amount of money can usually purchase: a clean slate for his successor.
The Great De-Concentration was not capitulation. It was not market timing, though Buffett’s instincts about technology valuations may prove prescient. It was not even tax optimization, though it captured that benefit incidentally. It was the deliberate transformation of a concentrated equity position into strategic flexibility, executed by a man who understood that his final gift to his successor was not wealth but freedom.
The Treasury bills were merely the parking place while Abel figures out what to do with that freedom.
III. THE FORTRESS THAT BOUGHT ITSELF
The cash position that resulted from the Apple liquidation, combined with two years of retained operating earnings and continued equity sales, represents the most aggressive liquidity accumulation in the history of corporate finance. The numbers are so large that they require context to comprehend, and even with context, they strain belief.
As of the third quarter of 2025, Berkshire Hathaway held $381.7 billion in cash, cash equivalents, and short-term Treasury securities. This figure exceeds the market capitalization of all but approximately twenty-five publicly traded companies on Earth. It exceeds the gross domestic product of most nations. It exceeds the total assets of major regional banks. It represents, depending on how one calculates, approximately five percent of the entire outstanding supply of United States Treasury bills.
Warren Buffett has, in effect, transformed Berkshire Hathaway into a sovereign wealth fund operated from a modest office building in Omaha, Nebraska.
The composition of this liquidity matters as much as its magnitude. The overwhelming majority, approximately $305 billion at last disclosure, is invested in short-term Treasury bills. These are the safest, most liquid securities that exist: direct obligations of the United States government, redeemable at par within weeks or months, immune to corporate credit risk, interest rate risk, and virtually every other form of financial distress short of the collapse of the American monetary system itself.
The yield on these holdings, at current Treasury bill rates of 4.0% to 4.5%, generates approximately $15 billion in annual pre-tax income. This figure exceeds the operating earnings of Burlington Northern Santa Fe Railway, Berkshire’s largest non-insurance subsidiary. It exceeds the combined underwriting profits of every Berkshire insurance company in a normal year. It is risk-free income requiring no management attention, no capital expenditure, no regulatory approval, no competitive positioning, no employee oversight, no customer acquisition, no anything.
The cash fortress has become, in effect, Berkshire’s second-largest profit center, and the only one that generates returns simply by existing.
This transformation inverts the conventional understanding of corporate cash positions. For most companies, cash is a residual: what remains after investing in operations, paying dividends, and buying back shares. Cash is tolerated but not celebrated, a necessary buffer against uncertainty that ideally should be minimized in favor of higher-returning deployments. Finance textbooks teach that holding excess cash destroys value, that shareholders can invest idle funds themselves and should not pay management to do it for them.
But Berkshire has never been a normal company, and 2025 is not a normal year.
The S&P 500, as of the date of this analysis, trades at approximately twenty-eight times earnings. This multiple implies an earnings yield of roughly 3.6%: the return an investor receives, in the form of earnings per share, for each dollar invested in the average American stock. Treasury bills, meanwhile, yield 4.3%. The arithmetic is not subtle. A risk-free instrument currently outperforms the average equity on a pure yield basis, without consideration of the equity risk premium that investors normally demand for accepting the volatility and potential losses inherent in stock ownership.
In this environment, cash is not a drag. Cash is the highest-returning risk-adjusted investment available. By parking $381 billion in Treasury bills, Buffett is not being conservative. He is being opportunistic. He is earning a higher return than he would from buying the average stock, while retaining complete flexibility to deploy capital instantly should better opportunities emerge.
And opportunities will emerge. They always do.
The history of financial markets is a history of periodic dislocations, moments when fear overwhelms reason and assets trade far below intrinsic value. These moments occur, on average, once or twice per decade. The Global Financial Crisis of 2008-2009. The March 2020 pandemic panic. The dot-com collapse of 2000-2002. Each event created buying opportunities that generated extraordinary returns for investors with the liquidity and temperament to act when others were forced to sell.
During the 2008-2009 crisis, Buffett deployed approximately $25 billion across a series of investments that defined his reputation as capitalism’s lender of last resort. He provided $5 billion to Goldman Sachs in exchange for preferred stock yielding 10% annually plus warrants to purchase common shares at depressed prices. He invested $3 billion in General Electric on similarly punitive terms. He made smaller investments in Dow Chemical, Swiss Re, Harley-Davidson, and other companies desperate for liquidity. Each investment was structured to extract maximum value from distressed counterparties, and each generated returns that vastly exceeded what public market investments would have provided.
The current cash position suggests that Berkshire is preparing for a similar moment, but at unprecedented scale. With $381 billion available for deployment, Abel could execute the largest acquisition in corporate history without accessing external capital markets. He could recapitalize entire distressed industries. He could provide liquidity to any company in the world, on whatever terms he demanded, at whatever moment he chose.
This is the “elephant gun” that Buffett has spent two decades describing without ever fully loading. Now it is loaded. The safety is off. And the hunter has handed it to his apprentice with instructions that amount to: wait for the fat pitch, and when it comes, swing hard.
The strategic implications extend beyond mere deployment optionality. The cash position fundamentally alters the risk profile of investing in Berkshire shares. An investor purchasing BRK.B at current prices is not making a concentrated bet on equity markets. Approximately thirty-five percent of their investment is, in effect, a money market fund. Whatever happens to stock prices in 2026, more than a third of Berkshire’s asset value sits in instruments immune to equity market volatility.
For investors seeking protection against downside scenarios while retaining exposure to upside optionality, this combination is difficult to replicate through any other single investment. Berkshire has become a barbell portfolio wrapped in corporate form: maximum safety on one end, through the cash position, and maximum upside optionality on the other, through the potential deployment of that cash into distressed opportunities.
The fortress built itself, in the sense that every dollar of retained earnings and Apple liquidation proceeds flowed automatically to the Treasury bill allocation. But the strategic vision behind that construction was anything but automatic. It was the work of a ninety-four-year-old man who understood that the greatest gift he could give his successor was not a portfolio to manage but ammunition to deploy. The fortress is the gift. What Abel builds with it will determine whether the gift was wisely given.
IV. THE JAPANESE INFINITY MACHINE
While American financial media focused on the Apple liquidation and cash accumulation, Warren Buffett was quietly constructing the most sophisticated financial engineering apparatus of his sixty-year career. The Japanese trading house investments, when properly understood, represent not merely an equity allocation but a leveraged carry trade of breathtaking elegance, generating hundreds of millions in annual income while requiring no management attention, no currency hedging, no interest rate speculation, and no operational decisions whatsoever.
The structure begins with debt. Berkshire Hathaway has established itself as the largest foreign issuer of yen-denominated bonds, with outstanding obligations exceeding ¥1.3 trillion across maturities ranging from three to thirty years. The issuance strategy is characterized by regular tranches at fixed interest rates, creating a laddered liability structure that matches the indefinite holding period Buffett has publicly committed to for the underlying equity positions.
The terms of this debt reflect the peculiarities of Japanese monetary policy and the global hunt for yield that has characterized the post-2008 financial environment. In April 2025, Berkshire issued ¥90 billion in senior notes with a weighted average interest rate of approximately 1.6%. In July 2025, an additional ¥151.5 billion followed at rates averaging 2.3%. In November 2025, another ¥210 billion at comparable terms. The longest-dated tranches, maturing in 2055, carry coupon rates of approximately 3.1%, locking in thirty-year funding at costs that would have seemed impossibly low to any corporate treasurer in pre-2008 memory.
The use of these proceeds is equally straightforward. Berkshire has accumulated stakes exceeding nine percent in each of Japan’s five major sogo shosha: the diversified trading houses that form the backbone of Japanese commercial activity. Mitsubishi Corporation, Mitsui & Co., Itochu Corporation, Marubeni Corporation, Sumitomo Corporation. The combined market value of these positions exceeds $31 billion, representing gains of approximately 392% since the initial investments were disclosed in August 2020.
The arbitrage mechanics require no advanced mathematics to understand. Berkshire borrows yen at rates averaging 1.5% to 2.0%. It invests those yen in trading house equities that pay dividend yields ranging from 3.5% to 5.0%. The spread of 200 to 350 basis points represents pure profit generated by balance sheet efficiency rather than investment insight or managerial skill.
But the true elegance of the structure lies in its currency neutrality. Because both the assets and the liabilities are denominated in the same currency, fluctuations in the yen-dollar exchange rate have no impact on the economic returns of the position. If the yen strengthens twenty percent against the dollar, the dollar value of Berkshire’s trading house stakes increases by twenty percent, but so does the dollar value of its yen-denominated debt obligations. The two effects offset perfectly. If the yen weakens twenty percent, the opposite occurs, and again the effects offset.
Berkshire has isolated the equity risk premium and the dividend yield while completely eliminating currency risk. This is not hedging in the conventional sense, which involves paying premiums to transfer risk to counterparties. This is structural elimination of risk through liability matching, a textbook application of asset-liability management principles at sovereign scale.
The income mathematics reveal why this structure matters for the post-Buffett era. Based on disclosed dividend yields and estimated position sizes, the five trading house stakes generate approximately $812 million in annual dividend income. The interest expense on the yen-denominated debt approximates $135 million annually. The difference, approximately $677 million per year, flows directly to Berkshire’s bottom line as pure profit.
This income stream requires no management attention. It requires no operational decisions. It requires no competitive positioning or market timing or analytical insight. It flows automatically from the structure of the positions, year after year, compounding indefinitely. And because Buffett has publicly committed to holding these stakes for the long term, potentially forever, the duration of this income stream extends to the horizon of human planning.
At current rates, the Japanese carry trade will generate approximately $6.8 billion in net income over the next decade, before any consideration of appreciation in the underlying equity positions. If the trading houses continue to increase dividends at historical rates, which have averaged mid-single digits annually, the income acceleration will compound these figures further.
The Bank of Japan’s recent policy normalization presents no material threat to this structure. The December 2025 rate increase to 0.75% represents the highest policy rate in Japan since 1995, but Berkshire’s existing debt is fixed-rate with maturities extending to 2055. Even aggressive BOJ tightening to 1.5% or 2.0% would not affect Berkshire’s funding costs until the existing bonds mature and must be refinanced, a process that will unfold over decades rather than years.
And structural constraints limit how far Japanese rates can rise regardless of central bank intentions. With government debt exceeding 240% of GDP, the Japanese fiscal position imposes an implicit ceiling on interest rates. Every hundred basis points of rate increase adds trillions of yen to the government’s annual debt service burden. The trade breaks only under scenarios so extreme they would simultaneously destabilize the entire Japanese economy and financial system.
For Greg Abel, this inheritance represents both opportunity and constraint. The opportunity is obvious: a permanently compounding income stream that generates nearly $700 million annually without management attention, without analyst scrutiny, without competitive pressure. The Japanese positions require nothing from the CEO except the discipline not to sell them.
The constraint is equally significant. Buffett provided explicit assurances to the management teams of the five trading houses during his in-person visits to Japan, commitments that Berkshire would be a long-term partner rather than an activist investor seeking short-term extraction. Abel cannot liquidate these positions without violating those assurances and damaging Berkshire’s reputation for trustworthy partnership that took six decades to establish.
The Japanese infinity machine, once built, must be maintained. But maintenance, in this case, means simply letting it run. The most sophisticated financial engineering of Buffett’s career turns out to require nothing more complex than leaving well enough alone.
V. THE DEPARTURE THAT SIGNALED EVERYTHING
On December 8, 2025, three weeks before the scheduled leadership transition, Berkshire Hathaway announced that Todd Combs would resign to join JPMorgan Chase. The press release was brief, the public commentary was gracious, and the financial media treated the news as a routine executive departure elevated to newsworthiness only by the Berkshire name.
They were wrong about what the departure meant, and their error illuminates everything about what Berkshire is becoming.
Todd Combs joined Berkshire in 2010 as one of two portfolio managers designated to eventually assume responsibility for the company’s equity investments. For fifteen years, he managed a portion of Berkshire’s portfolio alongside Ted Weschler, the other designated successor. Their combined assets under management totaled approximately $27 billion, representing roughly ten percent of Berkshire’s total equity holdings. Their performance was respectable but unspectacular: combined annualized returns of approximately 7.8% over a decade, underperforming both Buffett’s personally managed positions and the S&P 500 index.
But Combs was more than a portfolio manager. Beginning in 2020, he assumed the role of Chief Executive Officer at GEICO, Berkshire’s struggling auto insurance subsidiary. His tenure there produced the most dramatic operational turnaround in the subsidiary’s history, a transformation that reveals both his capabilities and the limitations of what Berkshire could offer him going forward.
When Combs took charge, GEICO was bleeding market share to Progressive, which had deployed superior telematics and artificial intelligence to achieve pricing precision that GEICO could not match. The combined ratio, the insurance industry’s fundamental measure of underwriting profitability, had deteriorated to levels that threatened the subsidiary’s competitive position. GEICO, once the crown jewel of Berkshire’s insurance operations, was losing the technological arms race that would define the industry’s future.
Combs responded with institutional brutality of a kind rarely seen in Berkshire’s culture of decentralized autonomy. He reduced GEICO’s workforce from over 42,000 employees to 28,247, eliminating nearly a third of the company’s positions. He raised prices aggressively, sacrificing policy count growth to restore underwriting discipline. He improved the combined ratio from above 90% to 81.5% by 2024, the best performance in seventeen years. He transformed a subsidiary that posted a $1.9 billion underwriting loss in 2022 into one generating $7.8 billion in profit by 2024.
The turnaround succeeded spectacularly by any financial measure. But the methodology reveals why Combs chose to leave. His transformation of GEICO was achieved through cost reduction and pricing discipline, not technological advancement. In testimony during Berkshire’s annual meeting, insurance chief Ajit Jain explicitly stated that GEICO was “not pouring money into AI” despite the competitive necessity of matching Progressive’s capabilities. The investment required to close the technological gap would have been massive, the returns uncertain, the timeline extended. Combs had fixed GEICO’s near-term profitability without addressing its long-term competitive vulnerability.
His new role at JPMorgan offers a different kind of opportunity. The Strategic Investment Group he will lead commands $10 billion in initial capital allocation, part of JPMorgan’s broader Security and Resiliency Initiative focused on defense, aerospace, healthcare, and critical infrastructure. The advisory council assembled for this initiative includes Jeff Bezos, Michael Dell, former Secretary of Defense Robert Gates, and former Secretary of State Condoleezza Rice. The mandate is active investment in sectors experiencing geopolitical and industrial policy tailwinds, precisely the kind of thematic, opportunity-rich environment that Berkshire’s scale and structure struggle to address.
The timing of the departure carries its own significance. Combs could have left at any point during his fifteen years at Berkshire. He chose to leave three weeks before the leadership transition, after the succession architecture was complete, after his GEICO turnaround was secured, after his replacement could be named without disruption. The departure was not abandonment but completion. His work at Berkshire was finished, and better opportunities existed elsewhere.
Buffett’s public statement acknowledged this reality with characteristic obliqueness: “Todd has resigned to accept an interesting and important job at JPMorgan. JPMorgan, as usually is the case, has made a good decision.” The praise for JPMorgan’s judgment carries implicit acknowledgment that Combs’s talents may be better deployed outside Berkshire’s constraints.
The departure’s implications for Berkshire’s future extend far beyond one executive’s career choices. With Combs gone, Ted Weschler remains as the sole portfolio manager for Berkshire’s non-Buffett equity investments. This concentration creates obvious succession risk: a single manager overseeing tens of billions in assets with no designated backup or succession plan for his specific role. But the deeper significance lies in what the departure signals about the stock-picking culture that defined Berkshire for sixty years.
Greg Abel’s background is operational, not investment-focused. His career was built at Berkshire Hathaway Energy, where success is measured in regulated returns on equity, capital expenditure efficiency, and regulatory relationship management. He has no public track record of equity investment, no demonstrated interest in securities analysis, no apparent ambition to assume Buffett’s capital allocation role beyond the deployment of cash into wholly-owned operating businesses.
The equity portfolio, under this model, becomes a legacy asset. The Apple position, now reduced to manageable scale, will likely remain in place indefinitely. The American Express stake, held for thirty-one years, will continue to compound. The Coca-Cola investment, held for thirty-seven years, will generate its steady dividend income. New equity investments may occur, but they will be the exception rather than the expectation. The stock-picker culture that made Berkshire famous is giving way to an operational culture that values steady compounding over brilliant capital allocation.
This transformation is not failure. It is evolution. Berkshire has grown too large for the concentrated bets and opportunistic trading that characterized its first six decades. The $381 billion cash position makes clear that no equity investment at current valuations offers returns sufficient to justify deployment at scale. The Japanese carry trade generates more reliable income than any stock-picking strategy could provide. The operating businesses, managed well, compound value without requiring market-beating insight.
The Combs departure is not a loss. It is a signal that one era has ended and another has begun. The next Berkshire will be an operating company with a large but passive investment portfolio, managed for cash flow rather than capital appreciation, valued for stability rather than alpha generation. Whether this evolution preserves or destroys shareholder value depends entirely on Greg Abel’s ability to compound the operating businesses at rates comparable to what Buffett achieved through his capital allocation genius.
The Oracle placed his bet. Tomorrow, we learn whether the operating executive can deliver what the investment genius could not continue.
VI. THE OPERATING CORE
With the equity portfolio transitioning to passive stewardship and the cash pile awaiting deployment, the burden of value creation shifts to Berkshire’s wholly-owned operating subsidiaries. These businesses generated $13.485 billion in third-quarter 2025 operating earnings, a 33.6% increase from the prior year. They represent the foundation upon which Greg Abel’s Berkshire must build, and their performance will determine whether the post-Buffett era compounds value or gradually dissipates the accumulated capital of sixty years.
