Warren Buffett has consistently communicated with Berkshire Hathaway investors through his annual letters since 1977. In these missives, he highlights the company’s significant achievements, acknowledges errors, and articulates the characteristics that render certain businesses exceptionally valuable within Berkshire’s vast portfolio.
In his 2020 correspondence, Buffett reported that Berkshire Hathaway had yielded an astonishing 2,810,526% return since his acquisition of the company’s leadership in 1965. Central to this performance were four businesses, which Buffett described as "jewels" of the conglomerate.
Since that statement, Berkshire Hathaway's stock has appreciated an additional 40%, pushing its cumulative return to more than 5.5 million percent. This remarkable performance underscores the continuing importance of these four core businesses. This article examines each of these businesses and evaluates their contributions as Buffett prepares to relinquish his leadership position in January.
The Four Core Businesses Driving Berkshire Hathaway’s Value
1. Apple Inc.
Apple stands as Berkshire Hathaway’s largest single investment, with a substantial profit exceeding $100 billion realized from the initial $40 billion stake. Buffett has praised Apple as "probably the best business I know in the world." Despite that, Berkshire has actively reduced its holdings by nearly 70% since 2023, primarily motivated by tax considerations articulated by Buffett in 2024.
Though reduced, Berkshire still holds Apple shares valued at approximately $64.8 billion, representing 20.7% of its total holdings as of the last quarter, maintaining Apple’s role as a foundational asset.
2. Property and Casualty Insurance Division
Berkshire’s property and casualty insurance operations enjoy a unique financial advantage known as "float." This arises from holding insurance premiums prior to claims payments, granting the ability to invest substantial amounts of capital at Berkshire’s discretion. In 2020, this float amounted to $138 billion, functioning as an investment reservoir that profits from the returns generated on these third-party funds.
By 2025, Berkshire’s insurance float increased to $171 billion and had delivered $32 billion in after-tax underwriting profits. The business effectively profits by investing around $100 billion annually of others' capital, while retaining 100% of the investment gains—surpassing conventional hedge fund profit-sharing models.
3. Berkshire Hathaway Energy (BHE)
BHE, in which Berkshire holds a commanding 91% stake, has exhibited substantial growth since acquisition. Buffett noted in 2020 that annual earnings soared from $122 million at the time of purchase to $3.4 billion after 21 years. The 2024 earnings of $3.73 billion represented a modest increase compared to prior years but still reflect a remarkable return—about 3,000% of the original investment in 1990.
4. BNSF Railway
Acquired in 2010 for around $34 billion, BNSF is the largest freight railroad in the United States. By 2020, the railroad had returned $41.8 billion in dividends to Berkshire, signifying a full payback of the initial investment plus ongoing cash flow contributions. The railroad maintains a $2 billion balance to preserve its capacity to borrow at favorable rates without Berkshire’s guarantee.
Most recently, BNSF posted over $5 billion in earnings during 2023. Buffett has projected that BNSF will remain a valuable asset for Berkshire and the country a century from now, reflecting confidence in its long-term strategic value.
Ongoing Performance and Future Considerations
While Berkshire has divested a significant portion of its Apple shares, the remaining holdings continue to provide steady dividends, generating $62 million quarterly. This ensures Apple remains a significant contributor to Berkshire’s income stream.
BNSF, though capital-intensive with slower growth expectations inherent to the railroad industry, has successfully provided consistent returns and a steady dividend flow, reinforcing its status as a durable asset within Berkshire’s portfolio.
Meanwhile, Berkshire Hathaway Energy showed a 60% increase in operating earnings in 2024, indicating renewed momentum, while the property and casualty insurance operations nearly doubled their operating earnings to $9 billion, accompanied by a boost in float-derived operating earnings from $9.5 billion to $13.6 billion year-over-year.
These figures demonstrate that despite changes in market conditions and portfolio adjustments, the four key businesses that Buffett identified continue to deliver strong financial results, thereby underpinning Berkshire Hathaway’s overall success.
With Buffett’s impending departure as Chairman and CEO scheduled for January, shareholders can find reassurance in the enduring strength and productivity of these core holdings, which remain integral to Berkshire’s sustained value creation.