Michael Burry does not mince words and has never been one for polite consensus. The “Big Short” investor, made famous by his successful bet against the U.S. housing market before the 2008 financial crisis, has now set his sights on Berkshire Hathaway.
Burry recently argued that Berkshire Hathaway (BRK.A) (BRK.B) is no longer an attractive investment under new CEO Greg Abel. “I do not find Berkshire an attractive investment going forward,” he wrote.
His concern is straightforward. Abel may not share Warren Buffett’s legendary patience for waiting until an exceptional investment opportunity, or “fat pitch,” appears.
The criticism comes during a defining transition for Berkshire. Abel formally became CEO at the start of 2026, succeeding Warren Buffett after his decades-long run at the helm. He inherited a balance sheet with a record cash and Treasury-bill position of roughly $397.4 billion at the end of the first quarter.
That reserve began to decline in the second quarter, falling to approximately $365.5 billion as Berkshire increased share repurchases and stepped up investments.
Is Abel’s decision to deploy Berkshire’s cash pile a sensible evolution of its strategy, or an early warning that the discipline behind Buffett’s long-term success is beginning to fade?
Berkshire’s Cash Deployment Faces a Valuation Test
Based in Omaha, Nebraska, Berkshire Hathaway operates insurance, railroad, utility, manufacturing, service, retail, and investment businesses. The conglomerate commands a $1.14 trillion market capitalization, reflecting its scale and broad exposure to the U.S. economy.
The shares are up 3.52% year-to-date (YTD) and 11.97% over the past 52 weeks.
Its 22.77 times trailing price-to-earnings ratio exceeds the sector median of 11.49 times, while its 1.48 times price-to-book ratio sits above the sector median of 1.36 times.
Berkshire Hathaway reported $12.98 billion in operating earnings for the second quarter of 2026, up from $11.16 billion in the prior-year quarter. This 16% increase showed continued earnings strength, as its earnings per share are $6.02, up 14.89% from the last quarter.
Their manufacturing, service, and retail segment generated $4.47 billion in earnings, a 24% year-over-year (YOY) increase. Berkshire Hathaway Energy contributed $891 million in profit, rising 27%, while BNSF earned $1.56 billion, up 6%.
However, Insurance delivered a weaker quarter. The underwriting unit earned $1.73 billion, down 13%, while insurance investment income fell 9% to $3.06 billion. BRK.B spent roughly $4.5 billion repurchasing shares during the quarter, sharply above the $235 million deployed during the first three months of 2026.
It also became a net equity buyer, accumulating nearly $20 billion of stocks after selling more than it purchased for 14 straight quarters. Its net earnings attributable to shareholders reached $25.67 billion, more than double $12.37 billion a year earlier. That increase included $12.68 billion in investment gains, with $10.9 billion linked to unrealized equity gains.
Abel’s Spending Spree Tests Berkshire’s Discipline
Michael Burry’s warning centers on a clear shift at Berkshire Hathaway. Greg Abel is beginning to put more cash to work. Berkshire had trimmed its publicly traded equity holdings to 29 from 42, a sensible cleanup because smaller positions had little effect on a company of its size.
Berkshire ended June with roughly $365.5 billion in cash, cash equivalents, and short-term Treasuries, down from a record $397 billion just one quarter earlier.
The portfolio changes included a new position in Delta Air Lines (DAL). That purchase stands out because Warren Buffett had long criticized the airline industry after Berkshire’s earlier investments produced costly losses.
Berkshire remained a net seller of stock in the first quarter for the 14th consecutive quarter. That was its longest streak of selling more equities than it purchased. Yet the direction changed quickly as the company announced $16.8 billion of investments over several days.
Berkshire agreed to acquire Taylor Morrison Home Corporation for $6.8 billion and committed $10 billion to Alphabet (GOOG) (GOOGL), through a private placement. The Alphabet transaction initially raised questions about whether Buffett or Abel had made the call.
Buffett settled that debate in a July 15, 2026, CNBC interview. The 95-year-old chairman said, “I initiated it,” confirming that he drove the Alphabet investment.
He also acknowledged that Berkshire had missed an earlier opportunity to buy the Google parent. Still, Buffett said he did not like Alphabet as much as at least four or five other Berkshire-owned businesses.
The Abel-led company now holds roughly $31 billion of Alphabet shares, making the technology giant one of Berkshire’s largest equity positions.
These decisions explain why Burry sees a possible break from Buffett’s famed restraint.
Wall Street Sees Limited Near-Term Upside
Berkshire Hathaway’s next quarterly report will give another view into the company’s progress. Wall Street expects September-quarter earnings of $5.41 per share, compared with $6.26 per share a year earlier. That forecast represents a 13.58% annual decline.
UBS holds a more constructive view. The firm lifted its BRK.B price target on July 28 to $585 from $570 and maintained its “Buy” recommendation. Their revised UBS target represents 10.5% upside.
Wall Street’s consensus remains constructive, though not unequivocally bullish. Six covering analysts assign BRK.B a “Moderate Buy” consensus. The average analyst target of $527.80 represents 1.5% upside from here.
Conclusion
Burry’s warning deserves attention, but it looks more like a caution flag than a decisive bearish signal. Berkshire’s core businesses remain highly profitable, and Abel still has $365.5 billion in cash to deploy selectively. The stock may see limited near-term upside after its recent gains, especially given its premium valuation. Over time, shares are more likely to move higher if Abel’s buybacks, Alphabet investment, and Taylor Morrison acquisition produce solid returns.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
/Data%20codes%20through%20eyeglasses%20by%20Kevin%20Ku%20via%20Pexels.jpg)
/Space/Rocket%20launch%20streak%20by%20Alones%20via%20Shutterstock.jpg)
