Berkshire Hathaway Inc

Berkshire Hathaway Inc. is an American multinational conglomerate holding company headquartered in Omaha, Nebraska, United States.

Categories

Financial and Banking  

#7

Rank

$710.29B

MarketCap US

US United States

Country

Summary

Berkshire Hathaway is a holding company founded in Omaha, Nebraska, in the mid-1950s by Warren Buffett. Its market capitalization is close to $700 billion, and its class A shares (BRK.A) are among the most expensive in the stock market. 

Berkshire Hathaway owns a variety of well-known private businesses and significant minority interests in public companies, such as Apple. It also has a long investment portfolio of stocks in major public companies, such as Apple, Bank of America, and United Parcel Service. 

As of 2023, Berkshire's public market equity portfolio was valued at more than $363 billion. Berkshire's CEO Warren Buffett has long eschewed a diversified stock portfolio in favor of trusted investments that would be over-weighted in order to leverage the anticipated return. In May of 2021, Buffett announced that Greg Abel, the 58-year-old Vice Chairman of Berkshire's noninsurance businesses, would likely be the company's successor.


History

The origins of Berkshire Hathaway can be traced back to a textile manufacturing firm founded in 1839 by Oliver Chace as the Valley Falls Company in Valley Falls, Rhode Island. Prior to this, Chace had gained experience working for Samuel Slater, who was credited with founding the first successful textile mill in the United States. Chace himself had founded his first textile mill in 1806. Eventually, in 1929, the Valley Falls Company merged with the Berkshire Cotton Manufacturing Company, which had been established in 1889 in Adams, Massachusetts. This merger resulted in the creation of a new company called Berkshire Fine Spinning Associates.

During the Great Depression, Berkshire Hathaway struggled along with many other businesses, but managed to survive through a combination of cost-cutting measures and government contracts for military textiles during World War II.

In the postwar period, Berkshire Hathaway began to expand its operations beyond textiles, acquiring a number of other businesses in diverse industries such as insurance, publishing, and retail. In 1951, the company acquired National Indemnity Company, which would become a key player in Berkshire Hathaway's insurance operations.

In 1955, Berkshire Hathaway acquired a stake in the Massachusetts-based department store chain, Hochschild Kohn & Co., and its subsidiary, Baltimore Bargain House. This marked the company's entry into the retail industry.

Despite its diversification, Berkshire Hathaway remained heavily invested in the textile industry, which continued to face stiff competition from foreign imports. In 1955, the company acquired Dempsey-Tegeler & Co., a New Bedford-based textile manufacturer, in an effort to remain competitive.

During this period, Berkshire Hathaway was led by a number of executives, including Warren Buffett's eventual mentor, Benjamin Graham. However, it was not until the 1960s that Warren Buffett himself would become involved with the company and ultimately transform it into the diversified conglomerate it is today.

In 1962, Buffett began purchasing shares of Berkshire Hathaway and ultimately became the company's largest shareholder. However, at the time, Berkshire Hathaway was struggling and its primary business, textile manufacturing, was facing steep competition from foreign imports.

Despite this, Buffett saw potential in the company's other businesses, including its insurance subsidiaries. In 1967, Buffett acquired National Indemnity Company outright, and over the next several decades, he built Berkshire Hathaway into a diversified conglomerate with a wide range of holdings in industries such as retail, finance, energy, and transportation.

One of the keys to Buffett's success was his approach to investing, which he described as buying quality companies at fair prices and holding onto them for the long term. He also emphasized the importance of value investing, or identifying companies that were undervalued by the market.

Over the years, Berkshire Hathaway made a number of high-profile investments, including purchases of significant stakes in companies such as American Express, Coca-Cola, and Gillette. It also made several large acquisitions, including the 1998 purchase of General Reinsurance Corporation, which made Berkshire Hathaway one of the largest players in the insurance industry.

In addition to its business operations, Berkshire Hathaway also became known for its annual shareholder meetings, which attracted thousands of investors and became something of a cult event. Buffett's annual letters to shareholders also gained a reputation for their wisdom and insight into the world of investing.

By the end of the 20th century, Berkshire Hathaway had become one of the largest and most successful companies in the world, with a market capitalization in the tens of billions of dollars. Its success was largely due to Warren Buffett's leadership and his commitment to value investing and long-term growth.

Between 2000 and 2023, Berkshire Hathaway continued to thrive under the leadership of Warren Buffett, who remained at the helm of the company as its Chairman and CEO.

During this period, Berkshire Hathaway made several major acquisitions, including the 2010 purchase of Burlington Northern Santa Fe, one of the largest railroad operators in the United States, and the 2016 acquisition of Precision Castparts, a leading supplier of aerospace components.

In addition to its acquisitions, Berkshire Hathaway also continued to invest in a wide range of companies across various industries, with notable holdings including Apple, Bank of America, and Coca-Cola.

Despite its success, however, Berkshire Hathaway faced several challenges during this period. In particular, the company struggled to find attractive investment opportunities as the stock market reached new highs, leading to increased competition and higher prices for quality companies.

Buffett also faced questions about his succession plan, as he approached his 90s and investors began to wonder who would take over the company after his eventual retirement or passing.

In response to these challenges, Berkshire Hathaway began to shift its focus towards more shareholder-friendly policies, such as increasing dividends and share buybacks. The company also began to invest more heavily in technology and e-commerce, with notable investments in companies such as Amazon and Snowflake.

As of 2023, Berkshire Hathaway remained one of the largest and most successful companies in the world, with a market capitalization of over $600 billion. While the company faced challenges in a rapidly changing business landscape, it continued to adapt and evolve under the guidance of Warren Buffett and his team of top executives.


Mission

The mission of Berkshire Hathaway is "to deliver the right parts exactly on time, exceed our internal and external customer requirements through continuous improvement, and provide a place for hard-working, dedicated, knowledgeable and ethical people who believe in the company". 

It seeks to produce high quality goods and services while investing in them for the long run.


Vision

Berkshire Hathaway's vision, as stated by its Chairman and CEO Warren Buffett, is to be a long-term holder of companies and businesses that have strong economic prospects, and to use its financial strength to make strategic acquisitions that will benefit its shareholders over the long term. 

The company focuses on investing in a diverse range of businesses, including insurance, retail, energy, and transportation, with the goal of creating value for its shareholders.


Key Team

Warren E. Buffett (Chairman & CEO)

Charles T. Munger (Vice Chairman)

Ajit Jain (Vice Chairman of Insurance Operations)

Greg Abel (Vice Chairman of non-Insurance Operations)


Recognition and Awards
Berkshire Hathaway has received numerous awards and accolades over the years, recognizing its financial performance, innovative business practices, and contributions to the economy. It has been named one of Fortune's Most Admired Companies multiple times and has received awards for its investment performance, including recognition as one of the best-performing stocks of the 20th century. Warren Buffett, Berkshire Hathaway's CEO, has received several awards for his contributions to the field of investing and philanthropy, including recognition as one of the world's most successful investors. Berkshire Hathaway has received awards for its commitment to sustainability, including recognition for its efforts to reduce emissions and its investment in renewable energy.

Products and Services

Insurance

Berkshire's insurance businesses provide insurance and reinsurance of property and casualty risks primarily in the United States. In addition, as a result of the General Re acquisition in December 1998, Berkshire's insurance businesses also include life, accident, and health reinsurers, as well as internationally based property and casualty reinsurers. All of Berkshire's major insurance subsidiaries are rated AAA by Standard & Poor's Corporation, the highest Financial Strength Rating assigned by Standard & Poor's, and are rated A++ (superior) by A. M. Best with respect to their financial condition and operating performance.

Utilities and energy

Through its subsidiary, Berkshire Hathaway Energy, the company controls power distribution in the United Kingdom and Canada.  A major subsidiary of Berkshire Hathaway Energy is Northern Powergrid, which operates in the UK.

Manufacturing, service, and retailing

Recreational vehicles: On June 21, 2005, Berkshire Hathaway agreed to purchase Forest River Inc., the world's largest seller of recreational vehicles, from Pete Liegl.

Clothing: Berkshire's clothing businesses include manufacturers and distributors of a variety of clothing and footwear. Businesses engaged in the manufacture and distribution of clothing include Union Underwear Corp. – Fruit of the Loom, Garan, Russell Corporation and Fechheimer Brothers. Fechheimer Brothers is made up of two brands, Flying Cross and Vertx. Flying Cross manufacturers public safety uniforms and Vertx is a civilian tactical clothing company. Berkshire's footwear businesses include H.H. Brown Shoe Group, Acme Boots, Brooks Sports and Justin Brands. Justin Brands is made up of Chippewa Boots, Justin Boots, Justin Original Workboots, Nocona Boots, and Tony Lama Boots. Berkshire acquired Fruit of the Loom on April 29, 2002, for $835 million in cash. Fruit of the Loom, headquartered in Bowling Green, Kentucky, is a vertically integrated manufacturer of basic clothing. Berkshire acquired Russell Corporation on August 2, 2006, for $600 million.

Building products: Through its numerous acquisitions, the company is involved in the manufacture and distribution of clay bricks, concrete blocks, concrete blocks, cut limestone, and architectural coatings that are available primarily in the United States and Canada. It also manufactures fiberglass wool insulation products for homes and commercial buildings, as well as pipe, duct, and equipment insulation products. The company also makes engineered connector products, engineering software and services, and manufacturing machinery for the truss fabrication segment of the building components industry.

After acquiring Georgia-based Shaw Industries, Inc., it has become the world's largest carpet manufacturer based on both revenue and volume of production and designs and manufactures over 3,000 styles of tufted and woven carpet and laminate flooring for residential and commercial use under approximately 30 brand and trade names and under certain private labels.

Flight services: The company supplies high technology pilot training to aircraft operators in the fields of military, governmental, corporate, and regional or mainline flying. 

Retail: Berkshire offers home furnishings and is the leading national provider of rental furniture, accessories and related services in the "rent-to-rent" segment of the furniture rental industry.

It also offers jewellery, kitchen tools, boxed chocolates and other confectionery products, dairy desserts, beverages, prepared foods, blended fruit drinks, popcorn, other snack foods, novelty items, small toys, and party items.

Media: Through its various subsidiary and acquisitions, Berkshire Hathway offers newsletters, newspapers, and weekly editions in the United Kingdom and the U.S. 


References
Berkshire Hathaway Inc
Leadership team

Charles T. Munger (Vice Chairman)

Ajit Jain (Vice Chairman of Insurance Operations)

Greg Abel (Vice Chairman of non-Insurance Operations)

Industries

Financial and Banking

Products/ Services
Air Transportation, Automotive, Consumer Credit, Food Processing, Insurance, Property Insurance, Railroad, Real Estate
Number of Employees
1,000 - 20,000
Headquarters
Omaha, Nebraska, United States
Established
1839
Company Type
Public Limited Company
Company Registration
SEC CIK: 1067983
Revenue
Above - 1B
Traded as
BRK-A
Social Media

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Thu Apr 25 2024
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