Berkshire Hathaway and Buffet: A Story of Investing Success

History

Berkshire Hathaway began as a textile manufacturing company in 1839, but Warren Buffett did not become involved in the company until the 1950s. Buffett’s investment firm, then known as the Buffett Partnership, purchased a controlling interest in Berkshire Hathaway in 1965, and he quickly became the company’s chairman and CEO.

The concept changed into a holding company with diverse interests in insurance, retail, energy, transportation, and other industries over the years.

Business model

The business model is based on acquiring and managing a diverse portfolio of companies in a variety of industries. The company seeks to acquire high-quality businesses with strong competitive advantages that are well-managed, and then hold these businesses for the long term.

Berkshire Hathaway takes a hands-off approach to management, allowing its subsidiaries to operate autonomously without interference from headquarters. Berkshire Hathaway does, however, provide financial resources and support to its subsidiaries, which can include access to capital, risk management expertise, and other resources.

The company acquires minority stakes that could have promising growth prospects or are undervalued, in addition to wholly-owned subsidiaries.

They also invests in publicly traded companies, taking significant positions in companies that it believes are undervalued or have long-term growth potential with its substantial cash reserves.

Company milestones

•1965: Warren Buffett becomes a shareholder and takes control of Berkshire Hathaway in 1965. Berkshire Hathaway was a struggling textile manufacturer at the time.

Warren Buffett becomes a shareholder and takes control of Berkshire Hathaway in 1965. Berkshire Hathaway was a struggling textile manufacturer at the time.

•1970s: Buffett begins to diversify Berkshire Hathaway’s holdings by purchasing insurance companies, retailers, and manufacturers.

•1980s: Berkshire Hathaway begins to generate significant cash flows in the 1980s, allowing it to make larger and more lucrative acquisitions. Buffett also starts making significant investments in publicly traded companies like Coca-Cola and American Express.

•1990s: Buffett’s investment philosophy becomes widely known, and he is dubbed the “Oracle of Omaha.” Berkshire Hathaway’s stock price is skyrocketing, and the company’s market capitalization now exceeds that of many blue-chip corporations.

•2000s: Buffett’s Berkshire Hathaway continues to expand, with major acquisitions such as the Burlington Northern Santa Fe railroad and the Lubrizol chemical company. However, due to concerns about Buffett’s age and succession planning, the company’s stock price lags behind the broader market.

•2010s: Buffett begins to focus on succession planning in the 2010s, naming several high-profile executives as potential successors. Berkshire Hathaway continues to expand, acquiring Precision Castparts and the Duracell battery business.

•2020s: Despite the COVID-19 pandemic’s challenges, Berkshire Hathaway remains a highly profitable and successful company. In 2020, the company announced its largest acquisition to date, a $32 billion purchase of the natural gas assets of Dominion Energy.

Who is Warren Buffet

Warren Buffett is the chairman and CEO of Berkshire Hathaway, as well as one of the world’s most successful investors. He was born in Omaha, Nebraska in 1930 and began investing at a young age.

After graduating from the University of Nebraska with a degree in economics, he attended Columbia Business School, where he studied under the legendary value investor Benjamin Graham.

Buffett is well-known for his down-home demeanor and straightforward investment strategy, and he is widely regarded as a role model for investors worldwide.

Investment philosophy

Warren Buffett’s investment philosophy is based on the principle of value investing, which involves buying undervalued companies with a competitive advantage and holding them for the long term.

He has emphasized the importance of understanding a company’s business model, competitive position, and management team before investing.

Buffett has also emphasized the importance of investing in businesses with a sustainable competitive advantage, which allows them to generate high returns on investment over the long term.

Berkshire biggest holdings

1. Apple: Berkshire Hathaway owns 5.4% of Apple, the company’s largest investment. This investment was worth approximately $120 billion as of February 2023.

2. Bank of America: Berkshire Hathaway has a 12.8% stake in Bank of America, making it the company’s second-largest investment. This investment was worth approximately $41 billion as of September 2021.

3. Coca-Cola: Berkshire Hathaway owns 9.4% of Coca-Cola, making it the company’s third largest investment. This investment was worth approximately $22 billion as of February 2023.

4. American Express: Berkshire Hathaway owns 18.9% of American Express, ranking it as the company’s fourth-largest investment. This investment was worth approximately $24.93855 billion as of February 2023.

Market Cap over the years

Year	Market Capitalization (in billions)
1965	$118
1975	$316
1985	$2,627
1995	$32,767
2005	$127,500
2015	$344,730
2023	$679,99 (as of February 19)

Buffet fun facts

•His net worth is estimated to be more than $100 billion, making him one of the world’s richest people.

•Buffett is known for his frugal lifestyle, and he still lives in the same modest house in Omaha, Nebraska, that he purchased for $31,500 in 1958.

•He is a philanthropist who has promised to give away the majority of his fortune to charitable causes.

•Buffett is well-known for his affinity for cherry Coke, a beverage manufactured by one of Berkshire Hathaway’s subsidiaries, Coca-Cola.

•Lives the American Dream: Once selling chewing gum, Coca-Cola bottles, and magazines door-to-door and now has a net worth of $100+ billion.

•Purchased his first stock, Cities Service at only 11 years old.

FAQ

Why is berkshire hathaway stock so expensive?

The stock of Berkshire Hathaway is seen as pricey since there has never been a stock split, resulting in a relatively low number of outstanding shares and a very high stock price.

Furthermore, Berkshire Hathaway is renowned for its solid financial position and long-term investing approach, which have produced consistently great results over time.

This stock’s repute has drawn a lot of investors, which has increased demand and supported its high price.

How to buy Berkshire Hathaway stocks

1. Select a broker or an online brokerage platform: The first step in purchasing any stock is to select a broker or an online brokerage platform. Popular trading platforms include Robinhood, E*TRADE, TD Ameritrade, Fidelity, and Charles Schwab.

2. Open an account: Once you’ve decided on a broker, you must open an account with them. This typically entails providing personal information such as your name, address, and social security number.

3. Fund your account: Once you’ve opened your brokerage account, you’ll need to put money into it. This can be accomplished by transferring funds from your bank or other investment accounts.

4. Searching Berkshire: Search for Berkshire Hathaway stock using its ticker symbol, BRK.A for Class A shares or BRK.B for Class B shares.

4. Choose the type of stock to purchase: Berkshire Hathaway has two types of shares available: Class A and Class B. Class A shares are much more expensive than Class B shares, but they have more voting rights and typically trade at a higher price. Class B shares are less expensive, but have fewer voting rights.

5. Confirm the trade: Once you’ve placed your order, go over it and double-check that all of the details are correct. After you confirm the trade, your broker will carry it out and purchase the shares on your behalf.