Investors may want to keep a closer eye on this often-overlooked Berkshire business for the foreseeable future. CEO Greg Abel appears to have plans.
Investors may want to keep a closer eye on this often-overlooked Berkshire business for the foreseeable future.
CEO Greg Abel appears to have plans.
You likely know that Berkshire Hathaway (BRKA +0.22%) (BRKB -0.15%) is ultimately a massive insurance operation that owns a combination of publicly traded stocks and privately owned enterprises (like Duracell, Clayton Homes, and flooring company Shaw). What's less obvious is just how much cash these wholly owned businesses generate every year. In 2025, Berkshire's private companies produced $44.5 billion in operating earnings.
Even more surprising is where a sizable chunk of it comes from. Although insurance is (usually) its single-biggest cash cow, Berkshire Hathaway's railroad BNSF -- you may know it better as Burlington Northern Santa Fe -- accounts for more than 10% of the conglomerate's total operating income.
And CEO Greg Abel expects that number to grow for the foreseeable future.
It's clearly on Abel's mind, and for good reason
How do we know Abel is eyeing something bigger and better for BNSF? In his first-ever letter to Berkshire shareholders published in February, Warren Buffett's replacement plainly stated about the railroad, "The team recognizes the significance of this opportunity, and we will be disappointed if we do not deliver a substantial improvement over the next few years." He even offered specific numbers, explaining, "Each one-percentage-point improvement in operating margin generates approximately $230 million of incremental operating cash flow for our owners."
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For perspective on that figure, BNSF's 2025 revenue was $23.5 billion. With a 34.5% operating margin, that amounts to about $8.1 billion in operational cash flow from this one business.
Averytin News Financial update.