The "new" Berkshire and Michael Burry: investment philosophies and lessons

This article looks at two companies – Berkshire Hathaway (BRK) and Scion Asset Management – with investment philosophies that are interesting because they show how thoughtful minds are considering the “direction of travel” of markets in an environment characterised by ongoing bullishness and low volatility.   Both of these companies are bound together by a historical focus on value investing, meaning buying cheap / undervalued assets, and selling expensive / overpriced assets.

Berkshire Hathaway is reported to have changed its approach and perspective on investing its hordes of cash under the direction of new CEO Greg Abel, who took the helm at the beginning of this year.  Berkshire has done a few things differently but is mostly staying the same, at least from my perspective.  The company has made some new investments in 2026 as it looks to intelligently deploy some of the nearly $365.5 billion of cash and cash equivalents that it has accumulated over many years^[1].  This available liquidity is in addition to a long-term investment portfolio consisting of $362 billion comprised of listed stocks and long-term bonds.  As headline grabbing as it may be, the deployment of cash and / or any shift in portfolio mix has been relatively modest so far – slight, slow and deliberate, just as I would expect for this high quality global company.  Also important for investors in Berkshire stock, the company is continuing to invest at certain times in what it believes to be one of the best value stocks out there – itself – through stock repurchases.       

Michael Burry of Scion Asset Management, who made a fortune calling the subprime mortgage meltdown just prior to the onset of the Great Financial Crisis, also is signalling his views on select stocks and sectors in the market via both long and short positions.  It is Mr Burry’s short positions (via long dated put options) that interest me most, mainly because there is a “short A.I.” thematic risk woven in, a contrary bet in today’s red hot “everything A.I.” market.  Also, a few days ago, Mr Burry wrote in his Substack blog “Cassandra Unchained” that he is questioning the appeal of BRK now under Mr Abel’ leadership, mainly because he believes the new CEO will not have the patience of Mr Buffet in terms of biding his time – perhaps over a period of many years – to deploy their substantial cash in real value opportunities during sharp downturns. 

Interestingly, this commentary by Mr Burry ties both Berkshire Hathaway and Mr Burry’s family office together, although this is coincidental to this article. 

There is plenty of publicly available information on both companies, so I will keep my comments relatively brief.  And importantly, I will try to add some value by providing my views on both situations without boring you to tears in an otherwise hot and so far uneventful second half of August.

Berkshire Hathaway: is the company really doing that much differently?

Under Warren Buffet’s and the late Charlie Munger’s incredible joint leadership for decades, Berkshire Hathaway grew its conglomerate of businesses, maintaining its identity as part-operating company (mainly insurance/reinsurance) and part passive (minority) investor in public stocks and bonds.   

On January 1^st of this year, Mr Buffet stepped down as CEO, handing the reigns of BRK to executive Greg Abel.  Mr Abel joined Berkshire in 2000 when BRK acquired MidAmerican Energy, one of its core operating businesses today. 

BRK stock has bounced around a bit in the past year, ranging between $464.01/share and $537.74/share. YtD, BRK has underperformed the S&P 500 by virtually flatlining while the S&P 500 has returned 13.7%.  However, since 2000, BRK has delivered a return nearly 2.5x that of the S&P 500.  The stock does not pay a dividend, but the company has historically bought back its shares when it thinks they are undervalued in the market.  It is difficult to value Berkshire using traditional “back-of-the-envelope” valuation metrics because of its mix of operating company and investment company.  With its investment portfolio marked-to-market at the end of each quarter, this (to Mr Buffet’s dismay) often causes wild swings in net income from quarter to quarter, making metrics based on earnings difficult to analyse.  However, one company-metric – or certainly one Mr Buffet valued – is market-to-book value, which he believed should be 1.5x or better. 

As far as its investment philosophy, Berkshire can most aptly be described as a value investor, reluctant to buy anything that is deemed expensive whether in a passive or active (M&A) capacity.  Messrs Buffet and Munger largely steered clear of companies that they perceived carried risk that might make them vulnerable to technological transformation.  The “dynamic duo” were arguably the mother-of-all value investors.  This means that Berkshire sat on its growing cash hoard, while its long-term investments were concentrated mainly in large (dividend-paying) stocks like Coca-Cola (KO), Visa (V), Wells Fargo (WFS), Bank of America (BAC), Apple (AAPL) and a few others.  From an operating company perspective, BRK has traditionally stuck to its knitting as far as its businesses, acquiring companies that can slot into its existing core businesses which currently include insurance/reinsurance (GEICO), freight railroads (BNSF Railways), and utilities & energy (Berkshire Energy), among others. 

For context, it is certainly true that momentum investing has largely taken centre stage since the pandemic, outperforming value investing now for several years running.  This has left Berkshire with little new to do as far as new investments, so the company has had to be content running its core businesses and sitting on its growing cash pile.  At the end of 2019 (before the first pandemic quarter), Berkshire had cash and cash equivalents of $128 billion and an investment portfolio (“long term investments” on the balance sheet) of $257 billion.  At the end of 2025 – six years later and just as Mr Buffet was stepping down as CEO – the company’s cash and cash equivalents had ballooned to $366 billion, and the investment portfolio had increased to $362 billion.  Investors in Berkshire Hathaway are cult-like, appreciating the company’s approach and patience, even though they could increasingly be considered out of touch with the times. 

BRK had been the largest holding in my portfolio for many quarters, although I was selling in 2025 at levels above $510/share simply because the shares had run too much in my opinion.  Nonetheless, given my portfolio construct, I perceive BRK as an important cornerstone as one of the smartest value plays available, in some respects not dis-similar to a non-diversified value ETF.

Since Mr Buffet handed the reigns of Berkshire to Mr Abbel, the press has been writing that the company has suddenly changed its investment philosophy, implying that this could change the risk profile of the company.  It is true that the company has made some alterations to its stock portfolio this year, including selling positions in Visa (V), Mastercard (MA), Diageo and Domino’s Pizza, among others, in the first quarter.  BRK also started positions in Alphabet (GOOG) and Delta Airlines (DAL) this year, companies that do not necessarily fit the “old mantra” of value.  In spite of these changes, the company remains heavily concentrated (63% of $363 billion long-term investment portfolio at end of 1H2026) in five names: AAPL (20%), AXP (14.9%), KO (9.8%), BAC (9.1%) and GOOG/GOOGL (8.8%, new).

From an operating perspective, BRK has announced / made a couple of sizeable acquisitions this year, including closing OxyChem in January ($9.4 billion, announced 2025) and announcing the acquisition of Taylor Morrison Home Corp in June ($6.4 billion, 3Q26 business).

As far as stock buybacks, BRK has traditionally bought back its own shares when it believes they are under-valued, which Mr Buffet apparently felt was below 1.5x market-to-book.  I looked back at the company’s history of stock buybacks (since 2007).  The company had no buybacks between 2007 and 2017, and modest amounts of buybacks in 2018 and 2019.  However, in the two years following the pandemic when BRK shares were under pressure along with the market generally, Berkshire bought back over $50 billion (aggregate) of its own shares (in 2020 and 2021).  In 2022 and 2023, the company bought small amounts of stock back, and the repurchases stopped completely in 2024 and 2025.  Recall that the shares came off their highs in mid-2025, which seems to have motivated the company to restart its repurchases this year.  YtD in 2026, BRK has repurchased $4.4 billion of stock (through June 30^th), most of this in the second quarter. 

When I think about the company’s investment and share repurchase activity in the first half of 2026 since Mr Abel took over as CEO, there is a difference in approach.  However, I do not consider the changes material in the context of the amount of cash and cash equivalents and long-term investments on the company’s balance sheet.  As an investor, I believe that the subtle changes are in fact warranted to get Berkshire better positioned for the likely growth drivers in the coming years.  This will entail taking more risk in stocks that are considered growth (rather than pure value) stocks.  Having said this, the last thing I expect is for Berkshire to go all-in on anything.  I suspect that the company will continue to support its own shares through buybacks when they come under pressure.  The company certainly has enough resources to continue to do this. 

In a nutshell, the company’s new philosophy is perhaps coming around to the idea of “if you can’t beat them, join them”, by taking some calculated bets on companies that in the past might have been deemed too far off-the-beaten-path as far as pure value plays.  This is what seems to have rattled Mr Burry in his commentary a few days ago. 

In summary, I endorse Mr Abel’s approach, as I believe the company will be prudent and has enough cash that it can take intelligent risks, either around its core operating businesses or periodically, in select thematic plays by taking passive positions in companies that are poised to capitalise on generational trends like A.I.  I can never fathom Berkshire as an “all in” sort of company, so I am confident that Mr Abel – given the decades he has worked alongside Mr Buffet – will only take calculated risks that largely fit the investment philosophy of the company.  Let’s see how the shares respond in the coming quarters.

^[1] Note that this is the balance sheet line item “Cash and short term investments”.  Of this amount, Berkshire has a “hard hold” of at least $30 billion to support its insurance/reinsurance businesses (to pay out on catastrophic claims), with the rest freely available and invested nearly all in US Treasury bills.