Editor’s note: Beginning this week, Porter now delivers the Daily Journal every day that markets are open – that is, every weekday, Monday to Friday.

Inside today’s Daily Journal…

March 2, 2026

Dear Esteemed Directors,

I urge you to return Berkshire Hathaway (BRK) to its original form: the greatest compounding machine the world has ever seen.

Berkshire owns some of the world’s best insurance companies. For decades it compounded its equity at more than 20% a year through underwriting profits – by growing its “float” consistently and by investing that float and all of its earnings into the world’s best businesses, such as American Express (AXP), Coca-Cola (KO), and Apple (AAPL).

Almost as impressive, it long avoided the “conglomerate trap” – it didn’t buy many whole businesses, whose operations it would have to fund with its own precious cash. And it owned no businesses that Warren Buffett couldn’t fully handicap.

But, beginning in 2000 – and perhaps because of Buffett’s age – Berkshire regrettably abandoned that discipline. It has since invested hundreds of billions of its hard-won cash into many businesses that no one can handicap.

Worse, it has repeatedly bought whole businesses with very average economics, even when partial stakes of excellent businesses were readily available on the public markets, perhaps because of a mistaken belief that the resulting tax efficiency would prove more valuable than simply buying the better business. (Analysis to follow.)

Berkshire has now become what Buffett mocked for decades: a conglomerate built for the ego of its management team, not for the benefit of its shareholders.

As I will document fully in this letter, the current management team isn’t capable of maximizing the return on these assets. That’s been proven by their lackluster results for decades.

Berkshire’s decline in returns is not subtle. It is stark, measurable, and accelerating:

Management has warned that this decline in performance is inevitable – a mathematical certainty, they’ve said. But that isn’t true: there is no compelling reason to lash assets that are better funded with debt to the world’s best insurance company, which must be funded with equity. Likewise, had Berkshire stuck to owning partial interests in the world’s best businesses, instead of having to manage (and fund) a huge array of mediocre businesses, it would have continued to compound at market-beating rates for many decades to come.

Thus, despite the inevitable management claims to the contrary, Berkshire’s decline isn’t inevitable and you, wise directors, have a legal duty to stop this descent into mediocrity.

If the long-term decline isn’t yet concerning to you, then the company’s Q4 operating-earnings collapse of nearly 30% should have shocked you. It didn’t surprise me: I’ve long believed it was inevitable and have warned about this outcome for almost a decade.

This is the inexorable mathematical consequence of a doctrine that transformed America’s greatest compounding engine into a $1 trillion value trap.

The once-vaunted “Buffett Premium” has evaporated. It has been replaced with the “Berkshire Discount.”