Moat Rating Lowered to Narrow as Berkshire Faces the Prospect of Diminishing Returns Over Time

While Berkshire's operating businesses have generally provided the firm with a narrow moat on a combined basis, it has been the company's and management's ability to produce additional excess returns from the cash flows thrown off by its disparate operations that has historically pushed our moat rating into wide territory. It has become increasingly harder to justify that moat rating, not just because CEO Warren Buffett's ultimate departure will likely damp future investment returns, but because we continue to see slippage in some of the moat sources that support the economic moats in a few of its main operating businesses.