The sagacity of Warren Buffett, often lauded for his long-term, value-oriented investment philosophy, appears to be nearing a significant vindication with Berkshire Hathaway’s decade-old acquisition of Precision Castparts (PCC). Despite an $11 billion write-down in 2020 that prompted Buffett to acknowledge overpaying, recent industry developments suggest the specialized manufacturer of complex metal components could now be worth an astounding $100 billion, nearly triple its original purchase price. This resurgence highlights the profound impact of evolving market dynamics and the strategic importance of critical suppliers in sectors like aerospace and energy.
Precision Castparts’ Journey: From "Too Much" to Tremendous Value
Berkshire Hathaway’s acquisition of Precision Castparts in 2016 for $37.2 billion was, at the time, the conglomerate’s largest deal ever. The move was a testament to Buffett’s profound confidence in the company and its then-CEO, Mark Donegan, whom he described as an exceptional leader. Buffett publicly admitted the purchase represented "a very high multiple" for Berkshire, but expressed strong conviction in PCC’s long-term profit outlook, driven by its indispensable role in the aerospace industry. Precision Castparts is a critical supplier of highly engineered components for aircraft engines and other aerospace applications, including turbine blades, airfoils, and structural parts, which are vital for the safety and efficiency of modern aircraft.
However, this optimism faced a severe test just four years later. In 2020, the onset of the global COVID-19 pandemic brought the aerospace industry to a virtual standstill. Airlines grounded fleets, new aircraft orders plummeted, and manufacturers drastically cut production. This unprecedented downturn exposed the vulnerability of PCC’s business model, heavily reliant on the cyclical aerospace sector. In his 2020 annual letter to shareholders, Buffett candidly addressed the situation, stating he had been "simply too optimistic" about PCC’s profit potential and that his "miscalculation" was "laid bare" by the pandemic. Berkshire Hathaway consequently took an $11 billion write-down on the asset, a significant acknowledgment of impaired value. Despite this, Buffett maintained his belief in PCC as a "fine company — the best in its business," a sentiment that now seems prophetic.
Aerospace Recovery and Emerging Demand Catalysts
The landscape has dramatically shifted since the depths of the pandemic. The global aerospace industry is experiencing a robust recovery, fueled by a resurgence in air travel demand and a backlog of new aircraft orders. This recovery has, in turn, created an acute shortage of the specialized, complex metal components that Precision Castparts excels at manufacturing. These components, often produced through advanced processes like investment casting and forging, are essential for the high-performance demands of jet engines and other critical systems. The expertise and capital required to produce such parts mean that few companies can compete at PCC’s level, creating a formidable barrier to entry and cementing its strategic importance.
Further amplifying PCC’s value proposition is a burgeoning demand from another unexpected quarter: the energy sector, driven by the rapid expansion of artificial intelligence (AI) data centers. These data centers require enormous amounts of electricity, leading to increased reliance on natural gas turbines for power generation. Precision Castparts’ products are also crucial components within these turbines, providing a diversification of demand beyond just aerospace and enhancing its long-term growth prospects.
This week, the market’s recognition of the scarcity and strategic value of such manufacturers became strikingly clear. GE Aerospace announced its intention to acquire Consolidated Precision Products (CPP), a direct competitor to PCC, for a staggering $11.75 billion. Industry analysts, including Barron’s, swiftly pointed out the "pricey" nature of the deal, valuing CPP at 26 times its projected 2027 earnings before interest, taxes, depreciation, and amortization (EBITDA). Applying a similar multiple to Precision Castparts, Barron’s estimates PCC’s current worth to be approximately $100 billion. This valuation significantly surpasses earlier estimates of $60 billion to $75 billion from just last month, solidifying PCC’s position as one of Berkshire Hathaway’s most valuable, albeit sometimes overlooked, subsidiaries. The estimated $100 billion valuation is nearly three times the original $37.2 billion purchase price, representing a monumental turnaround from the 2020 write-down.
Berkshire’s "Hidden Value" and Calls for Greater Transparency
Despite the dramatic increase in Precision Castparts’ estimated value, Barron’s notes that Berkshire Hathaway and its share price are not fully reflecting this intrinsic value. This phenomenon is partly attributed to Berkshire’s unique communication strategy. Unlike many publicly traded companies, Berkshire Hathaway does not conduct analyst conference calls or investor events to highlight the performance of its individual subsidiaries. This approach, deeply ingrained by Warren Buffett, continues under CEO Greg Abel. While this philosophy aligns with a long-term, fundamental investing approach, it may obscure the true worth of its diverse holdings from a broader investor base.
Andrew Bary of Barron’s suggests that in a post-Buffett era, or even as the transition of leadership progresses, Berkshire may need to adapt its communication strategy. "Without Warren Buffett at the helm, Berkshire may have to start telling its story if it wants to attract a new generation of investors. This year’s trading action suggests that something may need to change," Bary commented. This sentiment underscores a growing discussion among market observers about how Berkshire can best convey its value proposition to a market increasingly focused on detailed segment reporting and proactive investor relations. Unlocking the "hidden value" of entities like Precision Castparts could be crucial for future share price appreciation and attracting a new cohort of shareholders.
Berkshire Hathaway Shares Outperform in a Volatile Market
In a week marked by broader market declines, Berkshire Hathaway shares demonstrated a modest resilience, offering a small but notable departure from recent trends. While major Wall Street averages retreated, both Berkshire’s Class A and Class B shares posted gains of nearly 0.9%. This performance stood in contrast to the S&P 500, which fell by 0.8%, and other key indices like the Dow Industrials and the Nasdaq Composite, which had experienced four consecutive days of declines until a Friday bounce. The broader market sell-off was driven by rising oil prices and increasing bond yields, factors that often trigger investor caution and a shift towards more defensive assets.
Despite this week’s relative outperformance, Berkshire’s Class B shares continue to trail the S&P 500 by more than 10 percentage points year-to-date. This underperformance highlights the challenge for a diversified conglomerate like Berkshire to keep pace with growth-oriented indices heavily weighted towards technology stocks, especially during periods of strong tech sector expansion. However, Berkshire’s ability to hold firm amidst broader market weakness reinforces its reputation as a stable investment, particularly appealing to investors seeking refuge during times of economic uncertainty. The conglomerate’s massive cash pile, currently at $365.5 billion (down 8.0% from March 31, and $359.2 billion excluding rail cash and subtracting T-Bills payable), provides both a cushion against downturns and strategic optionality for future investments or share repurchases. In Q2 2026 alone, Berkshire repurchased $4.5 billion of its shares, a move that signals management’s confidence in the company’s intrinsic value and its commitment to returning capital to shareholders.
Political Ad Controversy in Nebraska’s 2nd District
In local political news, the campaign for Brinker Harding, the Republican candidate vying for Nebraska’s 2nd Congressional District, swiftly addressed concerns regarding a campaign advertisement that briefly featured an image of Warren Buffett. The ad, which ran for a short period, included a picture of Buffett and his name on screen for approximately two seconds while Harding delivered a message about financial integrity. In the commercial, Harding stated, "Here in Omaha, we know a thing or two about the stock market, some more than others. But we do it without insider information." He then advocated for a ban on Congressional stock trading, criticizing lawmakers who "trade on secrets you’ll never know" and "get rich" while ordinary citizens "barely get by."
The use of Buffett’s image quickly drew a complaint from his daughter, Susie Buffett. According to a report by ABC affiliate KETV in Omaha, Susie Buffett contacted Harding on September 2, requesting the removal of the ad. She emphasized to the station, "Warren did not give Brinker his permission to use his face or name in his ad. It implies that my dad endorses him. He did not have permission to use it." This direct statement underscored the family’s concern about the implied endorsement, given Warren Buffett’s strict policy of not endorsing political candidates or using his public persona for partisan purposes.
In response to the controversy, Harding was quoted by KETV saying, "In Nebraska, we work hard and support each other, and we do it honestly. Warren Buffett exemplifies that, and that was the point of my ad." While he did not explicitly confirm the ad’s removal at that time, KETV noted that new campaign advertisements from Harding were already beginning to air on local stations. A spokesperson for the Harding campaign later clarified that while they did not believe the original ad implied an endorsement, they responded to Susie Buffett’s concern by accelerating the rollout of their next planned ad by several days, despite logistical challenges posed by the Labor Day weekend. The commercial currently in rotation notably omits any image or mention of Warren Buffett, resolving the issue respectfully. This incident highlights the careful line political campaigns must tread when incorporating public figures, especially those as universally recognized and respected as Warren Buffett, to avoid misrepresenting support or endorsement.
Reflecting on 9/11: Buffett’s Perspective on Risk and Insurance
A significant historical moment for Berkshire Hathaway’s insurance operations was the September 11, 2001, terrorist attacks. In a poignant exchange at the 2002 Berkshire Hathaway Annual Shareholders Meeting, an audience member asked Warren Buffett about the impact of 9/11 on his life and investment strategy, particularly given the substantial losses incurred by Berkshire. Buffett’s response offered profound insights into both personal and business transformations.
On a personal level, Buffett noted that 9/11 made "everybody in the country aware" of a vulnerability previously unfelt within national borders. He shared his long-standing concern, which Charlie Munger could attest to, about the possibility of a nuclear device in the country, likely from terrorists rather than a declared act of war. The attacks, he explained, underscored humanity’s lack of progress in interpersonal behavior juxtaposed with enormous advancements in the ability to inflict damage, a chilling realization that reshaped the national psyche.
From a business standpoint, the most significant impact was on Berkshire’s insurance segment. Buffett revealed that prior to 9/11, while they recognized the potential for massive monetary damages from "deranged people," insurance contracts had not been structured to either charge for or explicitly exclude such risks. Essentially, "we were throwing it in for nothing." While war risks were typically excluded, based on historical events like World War II, the specific nature of modern terrorism had not been adequately accounted for. "We didn’t take account of something that we knew was possible, but we just hadn’t seen. And that’s, you know, that’s the human condition, to some degree," Buffett reflected.
Post-9/11, the entire insurance industry underwent a fundamental reevaluation of its exposures. Companies realized they were carrying risks for which they were not compensated. Consequently, they had to either exclude these exposures or begin charging appropriate premiums. Berkshire Hathaway, in particular, took several decisive actions. Many existing policies with unpriced terrorism exposure gradually ran off. For new policies, Berkshire began selling "a fair amount, quite a large amount, of terrorism insurance that excludes what we call NCB, nuclear, chemical, and biological, as well as fire following nuclear."
Buffett explained the critical distinction: Berkshire could absorb "tens of billions of dollars" of exposure to conventional terrorism (non-NCB) across a wide geographic area, as the damage, while immense, tends not to aggregate catastrophically in a single act in the same way. The World Trade Center attack, he noted, was an extreme example of non-NCB damage. However, the potential for "hundreds of billions of exposure" from nuclear, chemical, or biological attacks meant that even one or two coordinated acts could "destroy the insurance industry," and by extension, Berkshire itself if it covered such risks. This strategic decision to exclude NCB risks was not about unwillingness to take risk, but about managing existential threats to the enterprise and the industry at large, demonstrating Buffett’s pragmatic approach to risk assessment and capital preservation. The long-term implications of 9/11 led to the creation of government backstops like the Terrorism Risk Insurance Act (TRIA) in the U.S., further reshaping the landscape of catastrophic risk management in the insurance sector.
Berkshire Hathaway Financials and Equity Holdings
As of September 11, 2026, Berkshire Hathaway continues to represent a robust financial entity, guided by its enduring investment principles. The Class A shares were trading at $766,000.00, while Class B shares stood at $510.37, with a trailing twelve-month (TTM) Price/Earnings ratio of 12.83, reflecting a valuation that remains attractive to many long-term investors.
Berkshire’s formidable cash position, a hallmark of Buffett’s conservative financial management, was reported at $365.5 billion as of June 30, down 8.0% from March 31. Excluding rail cash and subtracting T-Bills payable, the figure was $359.2 billion, representing a 3.8% decrease from the previous quarter. This substantial liquidity provides Berkshire with unparalleled flexibility to seize investment opportunities, weather economic downturns, and continue its program of share repurchases, which amounted to $4.5 billion in Q2 2026.
The conglomerate’s top equity holdings, as disclosed in its 13F filing on August 14, 2026, for the period ending June 30, 2026, largely reflect its long-standing focus on established, high-quality businesses. These include significant stakes in technology giants like Apple, major financial institutions, energy companies, and consumer staples, all chosen for their strong competitive advantages and consistent earnings power. While specific market values fluctuate, the core composition of these holdings underscores Berkshire’s commitment to companies that generate substantial free cash flow and possess durable economic moats. Investors can track these holdings and their current market values through CNBC.com’s Berkshire Hathaway Portfolio Tracker, offering transparency into the publicly traded portion of Berkshire’s vast empire.
This article is an expanded and enriched rewrite of the Warren Buffett Watch newsletter content. For more insights and updates on Warren Buffett and Berkshire Hathaway, you can sign up for the newsletter on CNBC.com.
