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Berkshire Hathaway owns a huge collection of businesses — from insurance to railroads to candy — and uses the cash they generate to buy more businesses and stocks.
Berkshire Hathaway is best understood as a giant holding company: a parent that owns dozens of separate businesses outright and holds a massive pile of stocks in other companies. Most of these businesses are boring in the best way. Its insurance arm — led by auto insurer Geico — takes in premiums and, crucially, holds onto the money before paying claims, giving Berkshire a huge pool of cash to invest. That "float" is the engine of the whole machine. Add in BNSF, one of America's two big freight railroads, and Berkshire Hathaway Energy, a large utility and power business, and you have the backbone of the company.
Beyond those pillars, Berkshire owns a grab bag of familiar names: See's Candies, Dairy Queen, Duracell batteries, Brooks running shoes, and paint maker Benjamin Moore, among many others. It also holds big stakes in public companies like Apple, American Express, Coca-Cola, and Bank of America. So when you buy Berkshire, you're not betting on one product — you're buying a diversified slice of American business, run from Omaha, Nebraska, by a famously decentralized team. How does it make money? Two ways. The operating businesses — insurance, rail, energy, manufacturing, retail — generate profits and cash every year. And the investment portfolio throws off dividends and gains. Those profits don't get paid out as dividends; Berkshire has famously never paid one. Instead, management reinvests the cash, buying whole companies or more stocks, and buys back Berkshire's own shares when they look cheap. That reinvestment strategy, run for decades by Warren Buffett, is the core of the story.
Berkshire began in Massachusetts as a cotton textile maker. By the late 1920s it had joined with other New England mills and took a name that said what it was: Berkshire Fine Spinning Associates. Together those mills made about a quarter of America's fine cotton cloth — a big position in an old industry.
A few decades later, Berkshire Fine Spinning merged with Hathaway Manufacturing, a New Bedford textile maker older than Berkshire itself. The combined company got the name Berkshire Hathaway and employed more than ten thousand people. But big and old did not mean healthy: the business was already performing badly, and the textile industry was heading the wrong way.
Warren Buffett's partnership bought enough stock to control the struggling textile company, after management lowered the price it would pay to buy back shares — a move that annoyed Buffett and pushed him to act. He took over and fired the managers. He later called Berkshire his worst investment ever. But he kept the shell of the company and turned it into a holding company for buying insurance businesses, which is where the real story starts.
Berkshire entered insurance by buying National Indemnity and National Fire & Marine for a modest price. The point was to offset the up-and-down textile business. What Buffett found was better than an offset: insurers collect premiums upfront and pay claims later, so they hold other people's money in the meantime. That pool of money, called float, became the engine of Berkshire's model.
Buffett bought a million shares of GEICO for about two dollars each, a fraction of the sixty-one dollars the stock had traded at a few years earlier. GEICO later became a wholly owned Berkshire subsidiary, and Buffett described it as the crown jewel of its businesses.
Berkshire could not find a buyer for its money-losing textile operation, so it shut it down as cheaper foreign competition kept winning. This ended the company's founding business. The capital freed up went into insurance and acquisitions — the company was now something entirely different from the one that started in 1889.
Berkshire listed its stock on the New York Stock Exchange to make trading cheaper for shareholders. It became the highest-priced stock on the exchange, at about four thousand three hundred dollars a share — up from twelve dollars when Buffett first bought in.
Berkshire made the largest acquisition in its history, buying the Burlington Northern Santa Fe Railway for forty-four billion dollars. The railroad became a major wholly owned operating business alongside insurance — a huge, steady, physical business rather than a stock position.
After six decades, Buffett announced he would retire as CEO at the end of 2025, with Greg Abel named as his successor. Buffett stayed on as chairman, and the handover was held up as a gold standard for how a company should plan succession.
Greg Abel took over as CEO at the start of 2026 and shifted strategy toward buying whole companies rather than picking stocks. He closed the OxyChem deal and the Taylor Morrison homebuilder acquisition, putting Berkshire's record cash pile to work. Shares later hit record highs as investors warmed to his decisive spending.
The honest flip side: Berkshire is gigantic, and size makes it hard to grow fast. It has lagged the S&P 500 in some recent years, and its future increasingly depends on successors rather than Buffett himself, who stepped back from the CEO role in 2026 with Greg Abel taking over. Its insurance results can swing wildly with disasters, and its railroad and energy units face real capital demands. Still, the balance sheet is fortress-like — a mountain of cash and very little net debt — which lets Berkshire do things few others can: buy when others are scared.
Saved answer · last researched 29 Oct 2026