Berkshire Hathaway as a permanent core holding — a fortress balance sheet, diversified earnings streams, and $330B in cash waiting for the next crisis to deploy
Francis Chou
Chou Associates Management
Est. ~16.1% of total portfolio
“Francis Chou: 'I look for businesses where I can sleep well at night. Berkshire Hathaway is the best sleep-well-at-night stock in existence.'”
The Business
- Berkshire Hathaway is a diversified conglomerate with operating businesses spanning insurance (GEICO), railroads (BNSF), energy (BHE), and dozens of manufacturing and retail companies
- The company holds $330B+ in cash and T-bills, plus a $300B+ equity portfolio with positions in Apple, Coca-Cola, American Express, and others
- FY2025 revenue was $371B with $67B in net income and an insurance float of approximately $170B
- Warren Buffett (age 95) remains chairman and CEO, with Greg Abel designated as successor
Why They Own It
“Francis Chou: 'I look for businesses where I can sleep well at night. Berkshire Hathaway is the best sleep-well-at-night stock in existence.'”
- Berkshire's fortress balance sheet ($330B+ in cash) provides unmatched safety — it is virtually impossible to permanently impair this business
- Diversified operating earnings from insurance, railroads, energy, and manufacturing provide stable, growing cash flows
- At 15x earnings, Berkshire offers reasonable value for a business with Buffett's capital allocation track record
- The cash optionality is worth significant value — Berkshire can deploy $100B+ during a market crisis at distressed prices
- Chou's deep-value philosophy aligns perfectly with owning the world's best capital allocator at a fair price
What the investor sees
Berkshire trades at roughly 15x trailing earnings with a $1T+ market cap. Chou's value-oriented approach values the cash position ($330B+) at par, the operating businesses at 10-12x earnings, and the equity portfolio at market. On a sum-of-parts basis, Berkshire's intrinsic value exceeds its current market price, particularly when accounting for the optionality embedded in the cash hoard.
Financial Snapshot
$371B
revenue FY2025
$67B
net income
~$1T+
market cap
$46,563
eps
15.6%
operating margin
$25B
free cash flow
$330B+
cash and tbills
~$170B
insurance float
The Moat
- Diversified earnings — dozens of operating businesses across insurance, transportation, energy, and manufacturing reduce single-point-of-failure risk
- Insurance float — $170B+ of zero-cost capital provides permanent leverage for investments
- Capital allocation excellence — Buffett's 58-year track record of deploying capital at high returns
- Fortress balance sheet — $330B+ in cash makes Berkshire nearly indestructible
- Reputation moat — business owners prefer selling to Berkshire, providing unique deal flow
What Could Go Wrong
Succession risk — Buffett's eventual departure could impact capital allocation quality
Cash drag — $330B earning T-bill yields while equity markets compound at higher rates
Size limits opportunity set — at $1T+, meaningful acquisitions are increasingly rare
Regulatory risk on insurance businesses — GEICO and other insurers face changing regulatory environments
Mark-to-market earnings volatility obscures underlying business performance
Catalysts
- Massive cash deployment during the next market downturn
- Continued share buybacks at prices below intrinsic value
- Operating earnings growth across the portfolio of businesses
- Smooth CEO succession to Greg Abel removing uncertainty discount
In Their Own Words
“Francis Chou: 'The margin of safety in Berkshire comes from multiple layers: the cash, the insurance float, the diversified earnings, and Buffett's judgment. No other company has all four.'”
“Francis Chou: 'I don't try to get rich quick. I try to get rich slowly and safely. Berkshire embodies that approach perfectly.'”