What is Berkshire Hathaway Inc.,?
Berkshire Hathaway Inc. is an American multinational conglomerate holding company headquartered in Omaha, Nebraska. The company owns GEICO, Duracell, Dairy Queen, BNSF, Lubrizol, Fruit of the Loom, Helzberg Diamonds, Long & Foster, FlightSafety International, Pampered Chef, and NetJets, and also owns 38.6% of Pilot Flying J; 26.7% of the Kraft Heinz Company, and significant minority holdings in American Express (17.6%), Wells Fargo(9.9%), The Coca-Cola Company (9.4%), Bank of America (6.8%), and Apple(5.22%).
According to the S&P 500 index, Berkshire is the seventh-largest company by market capitalization and is famous for having the most expensive share price in history with a Class A share costing around $300,000 each.
When was Berkshire Hathaway Founded?
It traces its roots to a textile manufacturing company established in 1839 as the Valley Falls Company in Valley Falls, Rhode Island by Oliver Chace. It has over 180 years.
History of Berkshire Hathaway
Berkshire Hathaway was initially a textile manufacturing company established in 1839, by Oliver Chace in Valley Falls, Rhode Island. In 1806, Chace founded his first textile mill in America. Later the Valley Falls merged with the Berkshire Cotton Manufacturing Company in 1929. The combined company was known as Berkshire Fine Spinning Associates. The Hathaway Manufacturing Company which had been founded in 1888 in New Bedford, Massachusetts merged with Berkshire Fine Spinning Associates in 1955.
After merging Berkshire Hathaway was headquartered in New Bedford and had 15 plants employing over 12,000 workers with over $120 million in revenue. However, seven of those plants were closed by the end of the decade accompanied by large layoffs and was ran by Seabury Stanton. Warren Buffet began buying shares in 1962, in Berkshire Hathaway after noticing a pattern in the price direction of its stock whenever the company closed a mill.
Stanton made an oral tender offer of $111⁄2 per share for the company to buyback Buffett’s shares in 1964. Warren Buffett received the tender offer in writing, but the tender offer was for only $113⁄8. Instead of selling at a slightly lower price he decided to buy more stocks in order to take full control of the company and terminated Stanton’s employment. Buffet later became the majority owner of the textile business that was falling.
Buffet initially maintained Berkshire’s textile business. He was expanding into the insurance industry and other investments by 1967. Buffet first purchased the National Indemnity Company and ventured into the insurance business. Berkshire acquired an equity stake in the late 1970s, in the Government Employees Insurance Company (GEICO), which forms the core of its insurance operations today.
Buffett claimed that purchasing Berkshire Hathaway was the biggest investment mistake he had ever made, and claimed that it had denied him compounded investment returns of about $200 billion over the subsequent 45 years. He claimed that had he invested that money directly in insurance businesses instead of buying out Berkshire Hathaway, those investments would have paid off several hundred folds.
Berkshire Hathaway Owner
It is owned by Warren Buffet who began buying Berkshire shares in 1962 after noticing a pattern in the price direction of its stock whenever the company closed a mill. He later became the majority owner. He is the Chairman and CEO.
Berkshire Hathaway Corporate affairs
As of 1 February 2019, Berkshire’s class A shares sold for $313,350.00, making them the highest-priced shares on the New York Stock Exchange. It’s shares closed over $100,000 for the first time on October 23, 2006. Berkshire invested in the preferred stock of Goldman Sachs as part of a recapitalization of the investment bank in 2008.
Buffett owned 31.7% aggregate voting power of Berkshire’s shares outstanding and 18.0% of the economic value of those shares as of 13 July 2016. Charlie Munger Berkshire’s vice-chairman also holds a stake big enough to make him a billionaire. Franklin Otis Booth, Jr., and David Gottesman early investment in Berkshire resulted in their becoming billionaires as well.
Berkshire has never split it’s class A shares because of management’s desire to attract long-term investors as opposed to short-term speculators. Class A stockholders are allowed to convert their stock to Class B, though not vice versa.
Berkshire Hathaway Governance
Berkshire Hathaway current members of the board of directors are Warren Buffett (Chairman), Charlie Munger (Vice-Chairman), Walter Scott, Jr., Thomas S. Murphy, Howard Graham Buffett (Buffet’s son), Ronald Olson, Charlotte Guyman, David Gottesman, Bill Gates, Steve Burke, Susan Decker, Meryl Witmer, Ajit Jain, and Greg Abel. Related Post: Anne Hathaway
Berkshire Hathaway Net worth
The company has a net worth of $618.1 Billion. The number of employees they have employed as of 2018 is 389,37. Their total assets add up to US$707.8 billion as of 2018 with their net income adding up to US$4.02 billion.
Berkshire Hathaway Subsidiaries
Some of their subsidiaries include:
- Acme Brick Company in the Materials and Construction sector
- Applied Underwriters in the Insurance and Finance sector
- Brooks Sports in the Apparel sector
- Ben Bridge Jeweler in the Luxury Items sector
- Benjamin Moore & Co. in the Materials and Construction sector
- Berkadia in the Mortgage Financing sector
- Berkshire Hathaway Assurance in the Bond Insurance sector
- AltaLink in the Electric Transmission sector
- Berkshire Hathaway Automotive in the Autosales sector
- Berkshire Hathaway Energy in the Utility sector
- BoatUS in the Insurance sector
- Borsheim’s Fine Jewelry in the Luxury Items sector
- Burlington Northern Santa Fe Corporation in the Railroads and Logistics sector
- Charter Brokerage in the Logistics sector
- WPLG-TV in the Media sector
- TTI, Inc. in the Electronic Component Distribution sector
- SE Homes in the Materials and Construction sector
- Duracell in the Household Products sector