Inside today’s Daily Journal…

Editor’s note: On May 16, 2025, Porter released The Better Than Berkshire Index, designed to show Complete Investor subscribers that they can outperform Warren Buffett’s Berkshire Hathaway. Over the next two weeks, using the insights he has learned from Buffett himself over the decades, Porter will explain exactly what’s gone wrong with Berkshire and how investors can build a portfolio that can do much, much better… 

On September 9, 2024, Ajit Jain sold 200 Class A shares of Berkshire Hathaway (BRK-A) at an average price of $695,418 per share.

The transaction cleared roughly $139.1 million in cash. It was the largest single sale of Berkshire stock Jain had ever made. It was also 55% of his personal stake.

Ajit Jain is no ordinary shareholder. He is the man Warren Buffett built the modern Berkshire Hathaway around. Jain joined Berkshire in 1986. He runs the insurance operations – every part of the float machine that, more than any other element of the company, has produced the compounded returns Buffett is famous for. When in his 2018 letter Buffett described auto-insurance giant GEICO as having added more than $50 billion to Berkshire’s intrinsic value, Jain was the man responsible for those numbers. When in the past the Berkshire annual meetings cut away from Buffett or the late Vice Chair Charlie Munger, the third microphone has been Jain’s… every year, for two decades.

Five days before Jain’s September 200-share sale, Berkshire’s Class A shares had peaked above $727,000. Less than two weeks earlier, Berkshire’s market capitalization had crossed $1 trillion for the first time in the company’s history. Jain sold five days off the all-time high.

He has continued to sell. In August 2025, 2,000 Class B shares. In September 2025, 15,000 more Class B shares. The selling has not stopped.

Steve Check runs Check Capital Management, whose largest single position, 24% of the book, is Berkshire Hathaway. Asked by Fortune to interpret Jain’s September sale, he answered honestly:

Buffett, asked at the 2025 annual meeting about the sale, said nothing of substance. The financial press did not press him.

The man who knows the engine best does not believe the company is worth what the market says it is worth. He is voting with his feet, and he is voting against the price. He is doing it at the all-time high, the $1 trillion mark, the moment of maximum institutional comfort.

Jain is right. The man who runs the only bucket of Berkshire that still compounds at a serious rate looked at the price tag in September 2024 and concluded the rest of the company was not worth it. He has been telling the world ever since.

A year ago, I introduced The Better Than Berkshire Index to our Partners and Complete Investor subscribers. Had I introduced it 20 years earlier, it would have been laughable.

Since around 2012, when Buffett first suggested that Berkshire would no longer outpace the S&P 500, I’ve been warning that Buffett – and Berkshire – aren’t what they used to be. Berkshire was once a risk-free and fee-free way to beat the S&P 500. It was what every American who is not a dedicated investor should own – and nothing else.

But it is not that anymore. As we approach the one-year anniversary of our launch of The Better Than Berkshire Index (which we introduced on May 16, 2025), I’m going to write a series of essays to show you exactly what’s gone wrong with Berkshire. To me, it is obvious that Berkshire must be restructured. And it’s obvious that it needs new management and a new board.

Berkshire has always been, first and foremost, an insurance company. And among Buffett’s most serious failures over the last 20 years was not to see how the auto-insurance market was evolving. As incredible as this may sound… it now seems likely that Berkshire will have to exit the business. That’s how bad Buffett’s management of GEICO has been.

I know that seems ridiculous. But that’s only because no one in the media will criticize Buffett or tell the truth about what’s happening at GEICO. The company with the famous gecko spokesman buys a lot of advertising in just about every media platform. Nobody criticizes their golden goose.

Here’s what the media is not telling you.

In 2010, GEICO and Progressive (PGR) each wrote roughly $14 billion of personal auto premiums. They were the second- and third-largest direct auto insurers in the United States. State Farm was first. The gap between GEICO and Progressive was small. The gap between either of them and the rest of the industry was enormous.

In 2010, Progressive launched a product called Snapshot.

Snapshot was a dongle – a small plastic device that drivers plugged into the diagnostic port under the car’s dashboard. The dongle recorded driving behavior – hard braking, time of day, miles driven, acceleration patterns – and uploaded it to Progressive. Progressive used the data to price the driver’s premium with a precision that the actuarial tables of the previous century could not match. Two drivers with identical zip codes, identical claims histories, identical credit scores, and identical vehicles could now be priced differently because one of them slammed the brakes seven times a week and the other slammed the brakes once a week.

GEICO did not respond… for nine years.

Snapshot was the modern usage-based-insurance platform on which Progressive’s pricing advantage was built. Progressive iterated on it relentlessly. In 2016, it launched a smartphone version, eliminating the dongle. In 2022, Progressive moved to continuous monitoring – the program ran every day the policy was in force, forever.

GEICO launched its first telematics product, DriveEasy, in the summer of 2019. Nine years after Snapshot. The product was structurally inferior to Snapshot from day one. It was launched in a small group of states. It produced no measurable competitive response.

At the 2019 Berkshire annual meeting, four months before DriveEasy’s pilot launch, a shareholder asked Ajit Jain about the gap. Jain answered with the kind of precision auditors and engineers use when they have run the numbers and no longer hope to soften them:

A 12-point loss-ratio gap, on a $40-billion book of premium, is roughly $5 billion of pre-tax underwriting profit foregone every year. Compounded against a competitor that reinvests it at 20%, the gap is the moat.

Jain said GEICO was focused on bridging the gap as quickly as they could. They were not.

From 2018 through 2025, Progressive’s net premiums written rose from $32.6 billion to $83.2 billion – an increase of 155%. Over the same seven years, GEICO’s premiums rose from roughly $30 billion to $45.2 billion – an increase of about 50%. By 2022, Progressive had passed GEICO in personal-auto direct premiums written for the first time since 2006. By 2024, Progressive’s book of personal-lines policies in force – the customer count, the actual measure of household reach – was 33 million versus a GEICO book that was shrinking. By 2025, Progressive wrote $83.2 billion to GEICO’s $45.2 billion.

In 2022, GEICO posted a $1.88 billion underwriting loss. The combined ratio reached 104.8 – nearly five points worse than break-even. Berkshire’s 2022 10-K attributed the loss to claims-frequency and severity inflation. The full explanation – that GEICO had been mispricing risk for a decade because it could not see the data Progressive could see – did not appear in the letter.

In January 2020, Buffett brought in Todd Combs, one of his investment lieutenants, as GEICO’s chief executive. Combs spent five years repairing the underwriting. He raised rates. He cut headcount from 42,000 to 28,000 – a 33% workforce reduction in four years. He paused new business in unprofitable states. He brought the combined ratio back to 81.5 in 2024 – the best in GEICO’s 21st-century history.

The cost was the customer base. GEICO’s policies in force fell roughly 9% in 2022 and roughly 10% in 2023. By the time the combined ratio recovered, the policy count had not. Combs left GEICO in December 2025 to take a senior role at JPMorgan. Buffett described the move in a press release, calling it a wise choice by JPMorgan.

Buffett’s 2024 letter, written before Combs’ departure, contained the candid admission:

The gem had been losing its luster for 15 years before Combs arrived. The repolishing required cutting a third of the workforce and shedding 5 million customers. The competitor that ran ahead during the polishing finished those years with a book of business 84% larger than the gem.

In May 2025, Buffett told the Berkshire board that he was retiring. The board named Greg Abel as CEO. In Abel’s inaugural shareholder letter, in February 2026, he said GEICO’s rate increases had restored margins but cost the company customers. He said competitors’ rate reductions might extend that pressure into 2026. He said restoring retention while maintaining underwriting discipline would take time.

What Abel did not say, but is true: the pricing cycle that allowed Progressive and GEICO to raise rates aggressively in 2022 through 2024 has now turned. The hard market is over. The soft market is here. Moody’s projects that 12 of the top 16 American property-and-casualty insurers will see combined-ratio deterioration in 2026. Industry-wide premium growth in personal auto will fall from 9% in 2024 to roughly 4% in 2026.

Soft markets reward the carriers who entered them with the better risk-segmentation engine. They punish the carriers who entered with a weaker one. Progressive enters the 2026 soft market with 33 million policies and the most-mature usage-based-insurance platform in the industry. GEICO enters with a shrunken book, a new chief executive in her first year, and a telematics product that Jain himself, in May 2025, claimed was now “as good as anyone” – a claim no analyst has been able to verify, and which is contradicted by the customer-acquisition numbers.

Berkshire’s insurance premium float, which generated $176 billion of investable capital at year-end 2025, isn’t growing anymore. The 2.2% underwriting profit on the float that Jain disclosed at the 2024 meeting will not repeat in a soft cycle. The cost of float, which has been below the Treasury-bill rate in 63% of measured years over Berkshire’s history, will rise. It will become a huge drag on Berkshire’s results.

Insurance is Berkshire’s engine. Insurance is Berkshire’s magic. And the genius who built Berkshire’s insurance business is selling.

Tell me what you think of today’s Journal: [email protected]

Good investing,

Porter Stansberry
Stevenson, Maryland

P.S. Porter has published a new book – which he has just released on Amazon. It’s called 2029: Why The Age Of Paper Money Is Ending And How To Survive The Coming Global Monetary Reset. Get it now… he will be discussing it in upcoming Journals.

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1. The picks and shovels of AI outperform. Artificial intelligence (“AI”) infrastructure stocks have surged 115% versus the equal-weight S&P 500 since December 2023, outpacing every other AI-related sub-sector. While hyperscalers Microsoft (MSFT), Alphabet (GOOG), Amazon (AMZN), and Meta (META) are projected to plow over $400 billion into AI capex this year, they have yet to demonstrate adequate returns on that investment. The only companies generating significant cash from this spend are the providers selling the chips, racks, fiber, and power: Nvidia (up 46% since being added to Complete Investor), Caterpillar (up 77% in Porter’s Permanent Portfolio), and Taiwan Semiconductor Manufacturing (up 44% in Permanent Portfolio).

2. Corporate profits are booming, but not everyone is benefiting. S&P 500 earnings per share (“EPS”) are on track to grow more than 13% in Q1 – the sixth straight quarter above that mark – with gains broadening well beyond tech and financials. The gap between EPS growth and net income growth has also narrowed to under one percentage point – roughly half of what it was six months ago – suggesting this is the result of genuine expansion, not financial engineering. However, consumer-facing sectors are the clear weak link. Discretionary earnings are expected to grow just 2.4%, while staples are expected to grow just 3.4% – and data show the consumers driving those numbers are increasingly the wealthy.

3. U.S. oil exports have surged since the Iran War began. U.S. crude and petroleum product exports hit a record 12.9 million barrels per day (“bpd”) last week, up 2.5 million bpd since the war began and double the January 2022 level. Refined product exports alone reached an all-time high of 8.1 million bpd. Diesel prices are up 105%. As long as the Strait of Hormuz remains closed, the world’s need for American oil and gas increases. Profits for refiners are set to follow in Q2 and Q3 this year.

Erez Kalir’s Tech Frontiers first recommended shares of clinical-stage biopharmaceutical company Sagimet Biosciences (SGMT) in January 2024… it’s up more than 100%, having jumped 46% today after announcing a capital raise from elite institutional biotech investors to expedite the Phase 3 trials of its acne-fighting drug denifanstat. “Sagimet will one day be worth north of $30 per share,” says Erez.

Leslie V. writes:

Ross Comment: The bullish view on Venture Global (VG) lines up exactly with the idea of lower U.S. gas prices. Unlike EQT, which is a seller of U.S. gas, Venture Global is a purchaser of U.S. gas. As a liquefied natural gas (“LNG”) exporter, Venture Global makes money by capturing the spread between U.S. and overseas gas prices. So lower U.S. gas prices are bullish for Venture Global – and bearish for EQT.

David L. writes:

Jeff B. writes:

Charles B. writes:

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