Buffett’s $11 Billion Mistake Is Quietly Becoming a Triple
Six years ago, Warren Buffett stood in front of Berkshire Hathaway shareholders and admitted he had been “simply too optimistic.” Berkshire had just taken an $11 billion write-down on Precision Castparts, the complex-metal-components maker it bought for $37.2 billion in 2016 — Buffett’s biggest acquisition ever, and by his own account, one where he paid “a very high multiple.” The pandemic gutted the aerospace industry, Precision Castparts’ largest customer base, and the deal looked like a rare Buffett misstep.
It’s taking the better part of a decade, but the thesis he never abandoned — that Precision Castparts was “the best in its business,” run by a CEO he trusted — is now playing out in full. A shortage of the turbine blades and complex components the company makes has emerged, driven by both a recovering aerospace sector and a new source of demand: natural gas turbines needed to power AI data centers. This week, GE Aerospace agreed to pay $11.75 billion for Consolidated Precision Products, one of the only real competitors to Precision Castparts. Barron’s calls that price “pricey” at 26 times projected 2027 EBITDA — but using that same multiple, it estimates Precision Castparts alone could be worth roughly $100 billion. That’s nearly triple what Berkshire paid for the entire company nine years ago, and well above the $60–75 billion estimate Barron’s floated just last month.
The kicker for long-term investors: none of this appears priced into Berkshire’s stock. Analyst Andrew Bary notes Berkshire isn’t “getting much credit” for the subsidiary’s ballooning value, partly because CEO Greg Abel — like Buffett before him — skips the investor-relations theater of analyst calls and glossy conference appearances that might otherwise draw attention to a division quietly worth multiples of its purchase price.
So what for long-term investors: this is a case study in the difference between price and value playing out in real time. Buffett didn’t sell Precision Castparts after the write-down, didn’t chase a quick exit to save face, and didn’t let a short-term miscalculation override a long-term read on quality and management. Nine years and one pandemic later, the “mistake” is on track to be one of Berkshire’s better-performing acquisitions by dollar value created — a reminder that patience and conviction in a well-run business can outlast even a very public admission of having overpaid.