(This is the Warren Buffett Watch newsletter, news and analysis on all things Warren Buffett and Berkshire Hathaway. You can sign up here to receive it every Friday evening in your inbox.)

Buffett’s confidence in troubled decade-old acquisition finally pays off

Six years ago, when Berkshire Hathaway took an $11 billion write-down of its $37.2 billion 2016 acquisition of Precision Castparts, Warren Buffett wrote in his annual letter to shareholders he had paid “too much” for the company, which makes “complex metal components and products.”

While it was a “fine company – the best in its business,” he had been “simply too optimistic” about its profit potential, a “miscalculation … laid bare” by the enormous downturn for the aerospace industry, Precision Castparts’ largest customers, amid the Covid pandemic.

In a CNBC interview when the deal was first announced, Buffett admitted it was “a very high multiple for us to pay,” but told shareholders at the 2016 meeting he had great confidence in Mark Donegan, the company’s CEO, both then and now, and the company’s long-term profit outlook.

It’s taken longer than he planned, but Buffett’s purchase is now looking pretty good.

As Reuters puts it, there is currently a shortage of the “complex” products Precision Castparts makes that are essential for engine turbine blades.

They’re also used in natural gas turbines, which are in demand to produce energy for artificial intelligence data centers.

This week, GE Aerospace announced it would pay $11.75 billion to acquire Consolidated Precision Products, one of the few companies that competes against Precision Castparts.

Barron’s calls that “pricey” at 26 times projected 2027 earnings before interest, taxes, depreciation, and amortization.

Using the same multiple, Barron’s estimates Precision Castparts is worth around $100 billion. That’s well above the potential value of $60 billion to $75 billion it cited in an article last month that said the unit “probably has become one of the more valuable divisions” of Berkshire.

It’s also nearly three times the 2016 purchase price.

In the Barron’s piece, Andrew Bary said Berkshire, and its share price, aren’t “getting much credit” for the subsidiary’s rising value, in part because CEO Greg Abel, like Buffett, doesn’t do analyst conference calls or investor events that could draw attention to the unit’s performance.

His recommendation: “Without Warren Buffett at the helm, Berkshire may have to start telling its story if it wants to attract a new generation of investors. This year’s trading action suggests that something may need to change.”

Berkshire bounces a bit as Wall Street sells off

Berkshire Hathaway shares managed a modest gain this week even as Wall Street’s major averages declined, a small departure from the 2026 “trading action” Bary cites.

Both the Class A and Class B shares gained almost 0.9% while the S&P 500 fell by 0.8%.

Until Friday’s bounce, that benchmark index, along with the Dow Industrials and the Nasdaq Composite, had dropped four days in a row as oil and bond yields moved higher.

Even with this week’s outperformance, Berkshire’s B shares still trail the S&P 500 by more than 10 percentage points so far this year.

Nebraska candidate moves to replace ad that included Buffett’s image

The campaign team for the Republican running in Nebraska’s 2nd Congressional District accelerated the deployment of a new campaign ad after Susie Buffett complained about a previous commercial that briefly included an image of her father, Warren Buffett.

In the ad, a picture of Buffett and his name appear on screen for roughly two seconds as candidate Brinker Harding says, “Here in Omaha, we know a thing or two about the stock market, some more than others. But we do it without insider information.”

He then goes on to highlight his call for a ban on Congressional stock trading, saying some lawmakers “trade on secrets you’ll never know,” as they “get rich” while “we barely get by.”

In a report that led its 10 PM CT newscast Wednesday evening, ABC affiliate KETV in Omaha reported Susie Buffett had asked Harding on Sept. 2 to remove the ad.

She told the station, “I think it’s worth it to say that Warren did not give Brinker his permission to use his face or name in his ad.

“It implies that my dad endorses him. He did not have permission to use it.”

The KETV report quoted Harding as saying in a statement, “In Nebraska, we work hard and support each other, and we do it honestly. Warren Buffett exemplifies that, and that was the point of my ad.”

The report said Harding did not comment on whether the ad would be taken down but noted “it does look like new ads from his campaign are beginning to run on some stations.”

A Harding campaign spokesperson told me the campaign did not think its ad implied a Buffett endorsement, but to be respectful to the Buffett family, it responded to her concern by accelerating the rollout of its next planned ad by several days, although its effort was hampered by the Labor Day weekend.

The commercial now running does not show or mention Buffett.

BUFFETT & BERKSHIRE AROUND THE INTERNET

Some links may require a subscription:

– Best’s News and Research Service: 2026 Best’s Rankings: Berkshire Hathaway Takes DPW Top Spot Among Accident & Health Lines

– Financial Times: The day Warren Buffett saved Salomon Brothers

HIGHLIGHTS FROM CNBC’S BUFFETT ARCHIVE

The effects of 9/11 on Berkshire and the insurance industry (2002)

Warren Buffett shares his thoughts on the 9/11 attacks and explains how Berkshire’s insurance companies have started taking terrorism into account when writing policies.

AUDIENCE MEMBER: I know you lost a lot of money as a result of 9/11. But I would like to know how 9/11 changed your life and your investment strategy?

WARREN BUFFETT: It made everybody, I think, in the country aware, I mean, we’ve gone through world wars and all of that, and essentially felt quite protected within these borders.

And I have been quite worried about — Charlie can attest to — you know, the possibility, particularly of some kind of nuclear device in this country, by — probably more likely by terrorists than by some, at least, declared act of war by another state.

And 9/11 made everybody realize that as humans have not progressed, particularly, in terms of how they behave with each other over the years, they have progressed enormously in their ability to inflict damage on those they hate for one reason or another…

In terms of the business aspects of it, in your question, obviously the area at Berkshire that it effects most significantly, by miles, is insurance.

And prior to 9/11, even though we recognized that there could be huge monetary damages that flowed from the activities of what I would call deranged people, we hadn’t really written the contracts in such a way as to either get paid for taking that risk or to exclude the risk. In other words, we were throwing it in for nothing.

We had excluded risk for war. I mean, we knew that we’d seen what had happened in England in the 40s, and so we had taken account of something that some of us had seen with our own eyes, but we didn’t take account of something that we knew was possible, but we just hadn’t seen. And that’s, you know, that’s the human condition, to some degree.

Since September 11th, everybody in the insurance business recognizes that they had exposures that they weren’t charging for, and they either had to exclude those exposures or they had to charge for them.

We have written — first thing we had to do, of course, is we had lots of policies on the books that left us exposed to this, and most of those policies ran for a year, starting at different points. Those have run off to a great degree, but they’re not entirely run off.

The other thing we did was on new policies. We have sold a fair amount, quite a large amount, of terrorism insurance that excludes what we call NCB, nuclear, chemical, and biological, as well as fire following nuclear.

And, we can take a fair amount of exposure to that sort of terrorism, because it doesn’t — it won’t aggregate. It aggregated at the Twin Towers in a way that — World Trade Center — in a way that just about was as extreme as you could get for non-NCB-type activities.

I mean, that was a huge amount of damage done without nuclear, chemical, or biological.

But we can have tens of billions of dollars with NCB excluded throughout a greater New York area, or something, but we can’t have hundreds of billions of exposure that would be exposed, say, to, nuclear activities, because there an act or two, or three, coordinated, could cause damage that would destroy the insurance industry.

And if we had coverage on that, it would destroy us as well.

BERKSHIRE STOCK WATCH

Four weeks

Twelve months

BRK.A stock price: $766,000.00

BRK.B stock price: $510.37

BRK.B P/E (TTM): 12.83

Berkshire Cash as of June 30: $365.5 billion (Down 8.0% from March 31)

Excluding Rail Cash and Subtracting T-Bills Payable: $359.2 billion (Down 3.8% from March 31)

Berkshire repurchased $4.5 billion of its shares in Q2 2026.

BERKSHIRE’S TOP EQUITY HOLDINGS – Sep. 11, 2026

Berkshire’s top holdings of disclosed publicly traded stocks in the U.S. and Japan, by market value, based on the latest closing prices.

Holdings are as of June 30, 2026, as reported in Berkshire Hathaway’s 13F filing on August 14, 2026, except for:

– Mitsubishi, which is as of April 30, 2026

The full list of holdings and current market values is available from CNBC.com’s Berkshire Hathaway Portfolio Tracker.

QUESTIONS OR COMMENTS

Please send any questions or comments about the newsletter to me at alex.crippen@cnbc.com. (Sorry, but we don’t forward questions or comments to Buffett himself.)

If you aren’t already subscribed to this newsletter, you can sign up here.

Also, Buffett’s annual letters to shareholders are highly recommended reading. There are collected here on Berkshire’s website.

— Alex Crippen, Editor, Warren Buffett Watch

A vessel was hit in the Strait of Hormuz, the United Kingdom Maritime Trade Operations Centre said Sunday, while direct negotiations between the U.S. and Iran showed no signs of restarting.

The British maritime security alert service said in an X post that it received a report late Saturday of the vessel being struck by an unidentified projectile as it passed through the strait.

UKMTO said a fire started aboard the vessel and local authorities were assisting with the evacuation of its crew.

At the same time, a senior Iranian official ruled out the possibility of new talks.

“No negotiations. Until Iran’s terms are met, talks are futile,” Ebrahim Azizi, head of the Iranian parliament’s national security committee, wrote in an X post.

Iran has nevertheless been contacting neighboring countries, despite months of attacks against them in response to U.S. strikes.

A senior Iranian government official and a Gulf diplomat told MS NOW that representatives from Iran and Gulf states would gather in Muscat, Oman, on Monday to sign an agreement creating an Iran-Oman shipping route through the Strait of Hormuz.

The official also said that no negotiations with the U.S. are currently underway.

Speaking at the BRICS Summit in New Delhi on Friday, Iranian President Masoud Pezeshkian said his country would not give in and had withstood aggression from the U.S. and Israel.

“Iran has successfully stood against Israel and the U.S.,” Pezeshkian said.

“Since we are seeking truth and justice, we will not yield in front of bullying arrogance,” he added.

Pezeshkian’s remarks over the weekend followed U.S. President Donald Trump’s claim that Iran would have destroyed Israel and the Middle East and begun attacking U.S. cities had Washington not taken military action against Iran.

“If I had it to do again, I would do exactly what I did,” Trump said Thursday.

Exchange of retaliatory strikes

Shipping in the Strait of Hormuz has faced repeated retaliatory attacks in recent weeks.

U.S. Central Command, or CENTCOM, said Wednesday that it had destroyed 10 Iranian tankers during the previous week.

On Saturday, CENTCOM said its forces had redirected 100 commercial vessels over the past 60 days after resuming a naval blockade against Iran.

“ZERO ships have passed through the blockade without U.S. forces allowing,” CENTCOM said in an X post.

Trump said Saturday that the war in Iran would likely end soon after the November midterm elections, and he forecast a steep decline in energy prices once it does.

“I think very soon, I think it’ll be right after the midterms, actually,” Trump said while traveling in Ireland when reporters asked when the Iran war was likely to end. “I would say shortly, and oil will come tumbling down when that happens.”

Oil prices fell on Friday, although they still recorded substantial weekly gains after rising above $100 a barrel for the first time in months amid continuing instability in the Middle East.

Brent crude futures, the international benchmark, settled 2.8% lower at $104.61 a barrel. U.S. West Texas Intermediate fell 2.4% to close at $100.05 per barrel. Brent reached about $108 a barrel on Thursday, while WTI climbed above $104.

Oil and other cargo shipments through the strategically important Strait of Hormuz, which separates Iran and Oman, have slowed to a trickle since the U.S. and Israel began their war against Iran on Feb. 28, leaving ships and seafarers stranded for weeks or months.

Saudi Arabia has used its East-West crude oil pipeline to avoid the Strait of Hormuz. However, the kingdom said Friday that it had shut the facility as a precaution following several attacks by drones launched from Iraq.

The Saudi government said the drones struck the pipeline in the Riyadh and Medina regions on Thursday morning, causing fires and some damage. It said several people were injured in the attacks.

An artificial intelligence researcher quit his job at Anthropic on Tuesday and accused the company, and its chief rival, OpenAI, of acting irresponsibly, igniting a frenzy of concern on social media about the rapid pace of the technology’s development.

Jacob Coxon, who has worked as a researcher at both companies, said in a post on X that he resigned out of concern that Anthropic and OpenAI are “gambling with our lives.” He said the people building AI “earnestly believe that it could kill us all by the end of the decade.”

“Do not underestimate the power of this technology,” Coxon wrote. “These will soon be superhuman systems that can hack anything, revolutionize any field overnight, and acquire real power and resources.”

Coxon’s post, which has been viewed more than 70 million times, reflects a long-standing debate in Silicon Valley about whether AI can be safely developed and controlled. As Anthropic and OpenAI barrel toward potentially historic initial public offerings while releasing increasingly advanced models, many researchers are calling for a coordinated slowdown.

OpenAI’s chief scientist, Jakub Pachocki, published a blog post on Sunday and warned that no AI company has “solved alignment and monitoring to a sufficient degree to continue responsibly scaling at maximum speed for much longer.” In the AI industry, alignment refers to the work by AI developers to ensure that the system behaves in accordance with human values and intentions.

“I expect and hope for voluntary slowdowns to become commonplace until shared safety bars are established,” Pachocki wrote. “And I believe that international coordination on future AI development needs to become a top priority for governments around the world.”

Coxon’s post on Tuesday also struck a chord with industry researchers who are worried about recursive self-improvement, or an AI system becoming capable of designing and developing its successor without human intervention. Recursive self-improvement is not yet possible, but companies, including Anthropic and OpenAI, have warned that it would make it easier for humans to lose control over those systems.

“Neither company is acting responsibly,” Coxon wrote. “They are racing straight to self-improving superintelligence.”

Evan Hubinger, an alignment lead at Anthropic, echoed Coxon’s comments in a post on X late Tuesday.

“Jacob is correct here—we really do earnestly believe AI could kill all humans! I personally think it is >10% within the next decade,” Hubinger wrote. “I believe Anthropic is trying its best, but we do not yet have a plan to solve alignment for superintelligence and are not clearly on track to.”

While extreme, concerns about the potential for AI to cause human extinction or other catastrophic events are not new in AI research circles. In 2023, for instance, prominent AI researchers and executives, including OpenAI CEO Sam Altman and Anthropic CEO Dario Amodei, signed a statement that said “Mitigating the risk of extinction from AI should be a global priority alongside other societal-scale risks such as pandemics and nuclear war.”

Some experts even use a shorthand, p(doom), to estimate the probability of dire outcomes that could stem from AI.

Anthropic’s Hubinger was also one of roughly 1,400 AI researchers who signed an open letter called “Pacing the Frontier” in July. The letter urged the U.S. government to develop the tools necessary to support an effort to “deliberately pace the frontier of automated AI development.”

Some members of Congress have taken steps to try and address AI’s rapid advancement in the months following, but there’s no clear consensus about how the technology should be regulated.

In July, Rep. Jay Obernolte, R-Calif., and Rep. Lori Trahan, D-Mass., introduced a bill called the FRONTIER Act, which aims to establish a framework for governing the deployment of advanced AI models. And earlier this month, Sen. Bernie Sanders, I-Vt., and Rep. Greg Casar, D-Texas, introduced a bill called the Ban Artificial Superintelligence Act, which would temporarily pause advanced AI development until the federal government establishes safety rules. Both bills have been met with mixed receptions.

“Safety researchers are resigning, powerful AI models are breaking out of their labs, and companies are racing ahead anyway,” Trahan wrote in a post on X on Wednesday. “It’s past time for Congress to get off the sidelines and do its job.”

Lawmakers are also trying to navigate growing public backlash against AI data centers, the large facilities that house the hardware for training and running AI models. The pushback has grown so intense that the The National Republican Senatorial Committee, or NRSC, said last month that data centers have become a “sleeper issue” for the entire midterm election cycle, as CNBC previously reported.

Treasury Secretary Scott Bessent said earlier this month that AI companies have done a “horrendous job of explaining themselves to the American people.”

“They’re going to have to take some of the blame, and they are going to have to convince the American people that all the benefits will not accrue to a small group,” Bessent said, following the G20 meetings with finance ministers and central bankers in Asheville, North Carolina. “That’s what they hear from me.”