Michael Burry Calls Berkshire 'Not Attractive' as Earnings Double - Is He Right?

Michael Burry, the investor behind "The Big Short," declared on August 10 that he no longer finds Berkshire Hathaway Inc. (NYSE:BRK.B) an attractive investment under new CEO Greg Abel. The declaration landed days after the conglomerate posted second-quarter earnings that more than doubled.

For retirees and long-term holders who view Berkshire as one of the signs of financial success in a diversified portfolio, the clash between Burry's skepticism and the company's strong results deserves a closer look.

Burry's fear about life after Buffett

Burry wrote on his Substack that his biggest concern about Berkshire was always that Warren Buffett's successor "would be too old and otherwise not Warren" and would lack the discipline to wait for what Buffett called the "fat pitch," a term borrowed from baseball that describes a rare, high-conviction opportunity. He stated that he believes this fear has come true.

His critique centers on capital allocation rather than operations. Abel, who officially took over as CEO in January 2026, has moved more aggressively than Buffett did in his final years at the helm, and Burry views that pace as a red flag in what he considers an overheated market.

How Abel deployed capital in the second quarter

Berkshire became a net buyer of stocks for the first time in about 15 quarters, accumulating nearly $20 billion in net equity purchases during the second quarter, according to CNBC. Notable moves included a reported $10 billion investment in Alphabet Inc. (NASDAQ:GOOGL) and a $6.8 billion acquisition of homebuilder Taylor Morrison Home Corp.

Abel also directed approximately $4.5 billion toward share buybacks during the quarter, a dramatic increase from the $234 million deployed in the first three months of 2026, as noted by CNBC. Cash and short-term holdings dipped to roughly $365.5 billion, marking the first sequential decline in about four years.

The Q2 earnings behind the headline numbers

Berkshire's second-quarter results painted a picture of broad operational strength. Key figures from the earnings release, as reported by CNBC, included the following:

• Net income of $25.67 billion, more than doubling the $12.37 billion earned a year earlier
• Operating earnings of $12.98 billion, up 16% year over year
• Manufacturing, service, and retailing earnings up 24% to $4.47 billion
• BNSF railroad earnings of $1.56 billion, up 6%
• Berkshire Hathaway Energy profit up 27% to $891 million

Insurance underwriting was one soft spot, with earnings declining 13% to $1.73 billion. Berkshire cautioned that investment gains and losses in any quarter are "usually meaningless" and should not drive conclusions about the business.

Why the stock has lagged the broader market in 2026

Berkshire Class B shares have gained roughly 3.8% year-to-date, considerably trailing the S&P 500's approximately 13.3% advance over the same stretch, according to Morningstar. Part of that gap likely reflects the market adjusting to a company without Buffett at the helm, even though the operational engine has continued to deliver.

The underperformance does not necessarily validate Burry's concerns about capital deployment, but it does signal that investors are still weighing the leadership change. You may want to consider how much of the stock's historical appeal was tied to Buffett's personal track record compared with the underlying businesses themselves.

A Wall Street voice echoes Burry's caution

Paul Lountzis of Lountzis Asset Management told The Wall Street Journal that it is "very hard to want Greg to be making big deals in an ebullient market like now," adding that public markets are currently "kind of silly," as reported by Benzinga.

The concern from both Burry and Lountzis is not that Abel is making poor deals, but rather that deploying large sums in an elevated market could produce lower long-term returns than Buffett's strategy of sitting on cash for years while waiting for a compelling entry point.

The case for Berkshire's durability under Abel

Critics like Burry tend to focus on the investment side, but the operating businesses generated nearly $13 billion in a single quarter without any help from market gains. Berkshire's diversification across insurance, energy, railroads, retail, and manufacturing gives it a ballast that few publicly traded companies match, and that foundation does not change with a new CEO.

Abel also brings decades of operational experience from running Berkshire Hathaway Energy, so his leadership style may emphasize execution over headline-grabbing bets. For your portfolio, the question is whether you value Berkshire primarily as a capital-allocation vehicle or as a collection of durable businesses that generate cash regardless of who sits in the corner office.

Bottom line

Burry's critique raises a legitimate question about whether Greg Abel's faster capital deployment pace could produce lower returns in a market he and other investors consider overvalued. The Q2 results, meanwhile, show that Berkshire's operating businesses are delivering strong growth across most segments, with nearly $13 billion in operating earnings in a single quarter.

For those ready to start investing or re-evaluating a long-held position, the real test may come in the next downturn, when Abel's dealmaking discipline gets measured against Buffett's legendary patience. Monitoring how much of the remaining $365.5 billion in cash gets deployed, and at what prices, could tell you more about Berkshire's future than any single quarter of earnings.

This article is for informational purposes only and should not be considered investment advice.

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