Warren Buffett has long preached the virtues of compounding, patience, and discipline. But at this year’s Berkshire Hathaway (BRK.B) (BRK.A) annual shareholders meeting, the CEO and legendary investor offered a candid reflection on what might be the company’s most stubborn obstacle: its own scale.

“It’s too bad that Berkshire has gotten as big as it is because we love that position and I’d like it to be a lot larger than it is,” Buffett said, referring to Berkshire’s $20 billion stake in Japan’s five major trading houses. “We’ve got in the range of $20 billion invested and I’d rather have $100 billion than $20 billion. Size is an enemy of performance at Berkshire and I don’t see any good way to solve that problem.”

For most investors, size is a luxury. For Berkshire, it’s a constraint.

With a market capitalization of $1.1 trillion and more than $347 billion in cash and short-term investments on hand, Berkshire Hathaway is built to operate like a capital allocator on the scale of a sovereign wealth fund. But that success has created a structural problem, according to Buffett: the company is now so large that only the biggest investments can meaningfully impact its long-term performance.

Buffett’s comments were not an expression of dissatisfaction with the Japanese holdings — quite the opposite. He reiterated his enthusiasm for the trading house positions and stated that Berkshire had no intention of selling them in the foreseeable future. The issue, he explained, is that despite their quality, the holdings are simply not large enough to move the needle at Berkshire’s current scale.

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That tension — between opportunity and capacity — has become a defining feature of Berkshire’s modern investing challenge. Even when Buffett finds a business he believes in, as he has with the Japanese trading firms, Berkshire’s sheer size limits how much capital can be deployed without skewing the company’s overall exposure or taking on undue risk.

“I’d rather have $100 billion than $20 billion,” he said, making clear that the constraint is not in conviction but in the mechanics of deploying capital at massive scale.

A Long-Term Investor in a World of Short-Term Trades

This dilemma is especially pronounced in today’s global investing landscape. While central banks in the U.S. and Europe consider interest rate cuts to counter slowing growth, Japan has recently moved in the opposite direction — lifting rates for the first time in over a decade. Despite this divergence, Buffett has stayed focused on fundamentals, not central bank cycles.

He first entered the Japanese market in 2019, buying into the trading houses when, as he noted earlier in the Berkshire shareholder meeting, they were “selling at ridiculously low prices.” Since then, the positions have grown in value, paid steady dividends, and deepened Berkshire’s exposure to a stable, cash-generating segment of the global economy. But the fact remains: even a multi-billion-dollar position in solid companies doesn’t deliver the same performance boost when it’s part of a company as large as Berkshire.

That reality explains why Berkshire has increasingly focused on capital return strategies — such as stock buybacks, Treasury investments, and opportunistic acquisitions — rather than chasing every headline-making opportunity in tech, AI, or other fast-growth sectors. Buffett has repeatedly stated his preference for simplicity, durability, and cash flow — but those qualities are harder to scale at Berkshire’s size.

The Cost of Discipline

Buffett’s comment that “size is an enemy of performance” echoes a reality he has acknowledged before, but rarely with this level of clarity. Unlike smaller funds or individual investors who can take nimble positions in underfollowed stocks, Berkshire requires sizable, scalable investments to make a difference. A $1 billion opportunity might be a career-maker for most investors; for Berkshire, it’s barely a rounding error.

This constraint is compounded by Buffett’s reluctance to overpay, even in pursuit of scale. That’s why the company continues to sit on a large cash pile despite ample capital availability. For Buffett, it's not just about finding investments; it's about finding investments that meet his threshold for value, safety, and long-term return potential.

And even when he finds them, as with the Japanese trading houses, there’s still the problem of proportionality. “We love that position,” he said. “And I’d like it to be a lot larger than it is.”

The Problem Without a Clear Solution

Perhaps the most notable part of Buffett’s comment wasn’t the lament itself — it was the admission of limits. “I don’t see any good way to solve that problem,” he said, offering a rare public concession that Berkshire’s size now functions as a performance drag.

It’s not a matter of poor management or a lack of ideas. It’s the natural outcome of decades of compounding success. Berkshire has become a victim of its own effectiveness — a company so strong, so diversified, and so liquid that its very structure makes continued outperformance harder to achieve.

That doesn’t mean Berkshire is faltering. On the contrary, it continues to generate strong operating earnings and reward long-term shareholders. But the era of rapid compounding has given way to one of capital optimization — managing a vast portfolio with care, restraint, and realism.

Buffett has often said that investors should be wary of complexity and overpromises. His reflection on size is in that same spirit: a clear-eyed recognition that every strategy — even the best ones — eventually encounters limits.