Warren Buffett's biggest investing mistake may be worth $100 billion today — what Canadians can learn from this

For Canadians who hold Berkshire Hathaway shares, own a globally diversified fund or ETF that includes them or are simply building a long-term portfolio, the reversal is a useful case study. It’s a reminder that a ‘mistake’ can look very different once new information arrives — and that patience, not panic, tends to be the better long-term strategy.

What did GE’s deal reveal about Precision Castparts?

CPP makes complex metal castings used in jet engines and industrial gas turbines — parts so difficult to produce that Reuters described the process as a manufacturing “black art.” GE chief executive Larry Culp called the capability “mission-critical,” and CPP already supplies almost a quarter of GE’s castings.

GE’s purchase price values CPP at close to 26 times its estimated 2027 earnings before interest, taxes, depreciation and amortization (EBITDA) on a standalone basis — or about 18 times once GE’s expected cost synergies from bringing the supplier in-house are factored in, according to the company’s own deal disclosures. Precision Castparts is roughly six times larger than CPP by revenue and is on track for about US$12 billion in sales in 2026. Applying the higher, standalone multiple to a business of that size is where the US$100-billion estimate comes from — a choice worth noting, since it uses the more generous end of GE’s own valuation range.

Why is Buffett’s ‘mistake’ suddenly performing?

Precision Castparts’ underlying numbers have been improving. Berkshire’s second-quarter results showed the unit’s revenue rose 14% while pretax profit jumped 34%, and Barron’s estimates it could generate roughly US$3.3 billion in pretax income this year and US$3.8 billion in 2027.

Two forces are driving that growth. Commercial aerospace demand is recovering after years of supply-chain disruption, and airfoil castings used in industrial gas turbines are in higher demand as utilities and technology companies race to secure power for artificial-intelligence (AI) data centres. That makes Precision Castparts an indirect way for Berkshire — and, by extension, its shareholders — to gain exposure to the AI infrastructure boom without buying a chipmaker directly.

Is the US$100-billion figure realistic?

Not necessarily at face value. GE’s price reflects what a strategic buyer was willing to pay to secure a scarce supplier, not necessarily what an outside investor would pay for Precision Castparts as a stand-alone company. Berkshire also isn’t selling, so the figure is a comparison, not a transaction. Still, even a company like Berkshire Hathaway that’s valued at more than US$1.08 trillion (per Barron’s) could be underestimating what a US$100-billion internal asset is worth to the group as a whole — a caution investors should keep in mind before treating the number as fact.

What’s the takeaway for Canadian investors?

A few lessons apply directly to Canadians building their own portfolios:

• A written-down investment isn’t automatically a permanent loss. Before deciding a position has failed, check whether the underlying business has changed, not just whether the share price or purchase price took a hit
• Canadians who hold Berkshire Hathaway shares or a global equity fund in a TFSA or RRSP already have some exposure to bets like this one, without needing to chase single-stock speculation to access aerospace-recovery or AI-infrastructure trends
• Berkshire pays no dividend, so the usual RRSP-versus-TFSA question about U.S. dividend withholding tax doesn’t apply here — a good reminder to check that detail before assuming it’s the same for every U.S. stock
• Concentration risk cuts both ways. The same US$37-billion bet that briefly looked like Buffett’s worst deal now looks like it could be one of his best — proof that a single large position can swing dramatically in either direction

The bigger picture

Buffett has never hidden that he overpaid for Precision Castparts. What he never said was that the business itself was bad. A decade later, that distinction may be worth an extra US$60 billion or more.

For Canadian investors, the lesson isn’t to chase Berkshire Hathaway or bet on any single company’s turnaround. It’s to separate the price paid from the quality of what’s owned — and to give a well-run business enough time to prove what was the actual mistake.