Reading through this years Berkshire Hathaway (NYSE: BRK.A) annual report, I noticed that the cash float that the company is carrying in it's insurance enterprises has reached $59 billion. As "my pal Warren" explains, this float is free to invest as long as they break even on premiums and claims.

This is one of the many advantages Berkshire has had over other investors for decades, and this allows it to leverage it's returns without the risk that others would have to take to make the same money.

Berkshire does not own the float, but it owns the profits, and the larger the insurance business becomes the more float he has to invest. Adding the $59 billion to BRK's $41 billion of cash and short-term securities means that Buffett is walking around with $100 billion. Except for a few governments, there are not many entities with that kind of financial might.

If Buffett were to conservatively invest the funds and achieve a very modest 6% return, or $6 billion on the total, then he is actually generating 14.63% on his $41 billion. That is a very healthy return earned with low risk by the shrewdest investor of all time. He could certainly generate higher than a 6% profit and does. This is one of the ways that Berkshire has grown so large and increased shareholder equity so much.

Imagine if you could borrow interest-free an amount equal to or greater than your current investment capital from a friend, and each year your friend was willing to loan you a greater amount. That would improve your chances of success substantially.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of BRK.B.