BRK.B
Berkshire Hathaway Inc.
3.0%
-0.9%
$498.20
$493.81
Why This Position Exists
BRK.B is classified as price-below-value with HIGH confidence, supported by a 9-market prediction ensemble showing exceptionally high model agreement (0.91-0.97) across all risk domains. The core thesis rests on record operating earnings (~9x ex-cash), a widening insurance moat (GEICO CR ~80% for 7 consecutive quarters with 97% model agreement on sustainability), and 80% probability that PacifiCorp maintains investment-grade status. The market appears to embed a governance transition discount disproportionate to the probability-weighted outcomes, creating an opening for a systematically-sized position.
Trigger: Initial thesis assessment completed 2026-02-14 produced price-below-value classification with HIGH confidence based on 6 completed lenses and 9 forecast markets. Trigger is initial screening for play portfolio position.
Key Market Signals
Committee Verdict
The Portfolio Analyst presents a well-supported OPEN case: price-below-value with HIGH confidence, 9 active markets with the highest average model agreement (0.94) this committee has evaluated, and a thesis anchored by the insurance moat's 97% consensus durability and 80% PacifiCorp containment probability. The Risk Manager's Kelly computation produces a 3.2% position through rigorous mechanics — 12.6% raw Kelly discounted to quarter-Kelly with no conviction penalties, passing all five portfolio constraints with substantial margin. The Devil's Advocate raised five challenge points, with two at high severity: the imminent shareholder letter (Feb 28) and PacifiCorp's long-tail liability distribution. Both challenges are genuine, but I find them adequately mitigated: the letter is 85% probability of non-event with 0.96 agreement (already the base case), and the 3.2% weight limits portfolio-level impact to ~1% even in the most adverse compound scenario. The thesis-robust assessment from the Devil's Advocate — despite raising material concerns — confirms that the challenges do not undermine the classification itself.
Devil's Advocate
thesis robustThe challenges are genuine and material — particularly the imminent shareholder letter catalyst and the PacifiCorp long-tail liability — but the thesis is well-constructed with 9 active markets showing exceptionally high model agreement (0.91-0.97), the highest data quality I have seen in a committee evaluation. The quarter-Kelly sizing at 3.2% provides substantial buffer against adverse scenarios: even the most severe compound scenario (Triple Squeeze at 5-10% probability) would produce a portfolio-level impact of only ~1% at this weight. The thesis's own acknowledged weaknesses are transparently surfaced rather than hidden, and the balancing factors are adequately weighted through the Kelly framework's tail risk discount and data quality multiplier. The primary risk is timing — opening 4 days before a major catalyst — but the 85% probability estimate for a non-event letter, supported by 0.96 model agreement, suggests the base case is already priced in.
Notable Dissent
The Devil's Advocate raised a valid timing concern: opening a position 4 days before Abel's first shareholder letter creates unnecessary catalyst risk. A defer-until-March-1 approach was considered but rejected for two reasons: (1) the 85% probability of a non-event letter means deferral would most likely produce the same OPEN decision at a potentially higher price if the letter confirms continuity, and (2) if the letter surprises positively (15% probability), the de-escalation across governance signals would likely move the price before we could act. The asymmetry favors opening now at conservative sizing. The PacifiCorp long-tail concern is also material but is a multi-year risk that the 6-18 month thesis horizon and monitoring triggers adequately address.
Monitoring Triggers
• IMMEDIATE: Re-evaluate after Abel shareholder letter release (~Feb 28, 2026) — if letter contains specific capital allocation initiatives or if market reaction exceeds +/-5%, run update assessment
• Re-evaluate if PacifiCorp credit rating is placed on negative watch by any major agency
• Re-evaluate if cumulative PacifiCorp wildfire verdicts exceed $1B (halfway to the $2B escalation threshold)
• Re-evaluate if Ajit Jain files Form 4 disclosing additional discretionary BRK share sales
• Re-evaluate if GEICO combined ratio exceeds 90% in any reported quarter (deterioration signal before the 95% escalation threshold)
• Re-evaluate if California wildfire catastrophe losses exceed $2B in any reporting period
• Mandatory review if position return drops below -10%
• Mandatory review if thesis is not updated within 60 days (by April 15, 2026)
• Re-evaluate after Q1 2026 earnings release for updated operating metrics
Position Details
Feb 24, 2026
6
price-below-value
HIGH
Financial
1
Kelly Sizing Breakdown
EDGE
ODDS
KELLY
Trade History
| Date | Action | Shares | Price | Weight | Rationale |
|---|---|---|---|---|---|
| Feb 24, 2026 | OPEN | 6 | $498.20 | 0.0% → 3.0% | Committee approved OPEN. HIGH confidence price-below-value thesis with 9 active markets. Quarter-Kelly sizing at 3.0% reflects strong edge. Immediate re-evaluation after Abel shareholder letter (~Feb 28). |
Full Committee Transcripts (1)
Complete 4-step discourse records — expand each step to see the full reasoning from analyst, risk manager, devil's advocate, and committee chair.