Berkshire Rally Rewards Patient Capital Under Abel

Berkshire Hathaway’s Class A shares closed Friday at $798,000, within 1.4% of their all-time closing high of $809,350. It’s the company’s strongest finish since Warren Buffett told shareholders at the May 2025 annual meeting that he planned to step down as CEO at the end of that year. Class B shares finished at $532.02, also 1.4% below their record close of $539.80.

The rally took time. Both share classes closed at all-time highs the day before Buffett’s announcement. Over the next three months, they lost more than 14% as investors fretted that a “Buffett premium” was dissolving. The post-meeting low came in August 2025, and the recovery since hasn’t followed a straight line.

The Numbers

A loss Thursday snapped a 10-session winning streak that had added 5% to Berkshire’s share prices. The shares bounced back more than 1% Friday. Berkshire’s market capitalization stood at $1,138,885,966,355, and its Class B price-to-earnings ratio, based on trailing 12 months, was 13.38.

That’s a modest multiple for a company of this size. Berkshire’s Class B shares have also narrowed a 17.5-percentage-point deficit to the S&P 500 on June 1 by almost two-thirds. They’re now 6.0 percentage points behind the benchmark for the year.

Capital Discipline, Not Capital Hoarding

Investors may welcome how CEO Greg Abel has started putting some of the company’s large cash pile to work. Berkshire repurchased $4.5 billion of its own shares in the second quarter of 2026 and invested in Alphabet, Taylor Morrison Home, Lennar and Bending Spoons. The company hadn’t bought Lennar stock since October 2.

Still, the cushion is enormous. Berkshire held roughly $360 billion in cash, described as “a good symbol of continued patience under the new CEO.” Its cash stood at $365.5 billion as of June 30, down 8.0% from March 31. Excluding Rail Cash and subtracting T-Bills Payable, it was $359.2 billion, down 3.8%.

Keefe, Bruyette & Woods analyst Meyer Shields noted that higher short-term interest rates could lift the shares because Berkshire would be “making more money” on that cash.

Old Economy, Real Earnings

Some of the rally reflects businesses that make tangible things and write real policies. Berkshire’s insurance operations have benefited from a quiet hurricane season so far. Higher oil prices have helped its $19 billion stake in Chevron, whose shares closed Friday at an all-time high after gaining almost 36% since the start of July. Berkshire’s energy-related subsidiaries have also received a tailwind.

Investors may also be shifting away from high-flying AI and technology stocks toward “old” economy companies.

Coca-Cola, a long-time Buffett favorite and a $37.6 billion Berkshire holding, also closed Friday at an all-time high. It was up 34% year-to-date, perhaps helped by KFC’s switch from Pepsi to Coke. Berkshire’s position gained $2.4 billion since the previous Friday, overtaking Alphabet to become the portfolio’s third-largest stake.

The Bending Spoons Bet

The boldest move is also the least Berkshire-like. Bending Spoons, an Italian company that began trading on Nasdaq in July, buys internet companies including AOL, Evernote and Vimeo, uses artificial intelligence to cut costs, then puts the savings toward more acquisitions. It trades at a large multiple of its earnings.

Before the U.S. market opened Wednesday, the company announced Berkshire would invest a “further” $330 million, buying 10 million newly issued shares at $33 each in a private placement. That was almost 12% below Tuesday’s $37.86 close. The stock closed Wednesday up 41% at $53.46, then ended Friday at $47.07 after a technology sell-off. That’s 42.6% above Berkshire’s purchase price, a paper profit of nearly $141 million on the new shares.

The announcement also revealed Berkshire had put $600 million into the IPO more than three months earlier. Assuming the $29 IPO price, that would mean almost 20.7 million shares. Combined, Berkshire would hold close to 30.7 million shares, worth more than $1.4 billion at Friday’s close, a 55.3% gain on its $930 million total. The company said the investment brings Berkshire’s ownership to 4%; the math on presumed share counts suggests 4.5%. Who at Berkshire made the call isn’t known.

Bending Spoons CEO Luca Ferrari called Berkshire “among the finest and most respected capital allocators in the world.” Morningstar’s Greggory Warren said the deal and the then-$36 billion Alphabet stake showed “the firm is finally moving out of its comfort zone to find places to put capital to work, which should be viewed as a positive for long-term investors.” Barron’s Andrew Bary struck a more cautious note: “Many Berkshire holders would like to see the company invest more heavily in stocks given the company’s $350 billion-plus in cash, but Bending Spoons was a surprise” given its high valuation.

Why This Matters:

Berkshire’s recovery offers a case study in how markets price a leadership transition. Investors put a number on uncertainty with the 14% slide after Buffett’s announcement. The climb back suggests they’re now rewarding results: buybacks, energy earnings, insurance profits and a steady hand with a $360 billion cash hoard. It also shows capital allocators, not government planners, deciding where money works hardest.

The Bending Spoons stake is a test. A high-multiple, AI-driven acquirer departs from classic value investing, and Barron’s Bary called it a surprise. If the bet pays off, it will vindicate Abel’s willingness to move beyond the comfort zone. If it doesn’t, shareholders will notice. Either way, the market is holding Berkshire accountable, which is exactly how it should work.