The Complete Financial History of Berkshire Hathaway

Kumar Vimlesh April 9, 2023

0 1 2 minutes read

Berkshire Hathaway, a conglomerate holding company headquartered in Omaha, Nebraska, has a long and storied financial history. The company was originally established as a textile manufacturing firm in 1839 by Oliver Chace. However, it was not until Warren Buffett, a legendary investor, took over as Chairman and CEO in 1965 that Berkshire Hathaway’s financial fortunes truly began to take shape. Here is a comprehensive overview of Berkshire Hathaway’s financial history:

Early Years (1839-1964):

In 1839, Berkshire Hathaway was founded as the Valley Falls Company in Rhode Island, which later merged with Berkshire Cotton Manufacturing Company in 1889.
The company primarily focused on textile manufacturing, producing cotton and woollen products.
Over the years, the company went through several name changes and ownership transitions.
By the 1960s, Berkshire Hathaway was struggling due to increasing competition from foreign textile manufacturers.

Warren Buffett Era (1965-present):

In 1965, Warren Buffett took over as Chairman and CEO of Berkshire Hathaway.
Buffett shifted the company’s focus from textiles to insurance and investments, using the cash flow generated from its textile operations to acquire other companies and stocks.
In 1967, Berkshire Hathaway acquired National Indemnity Company, an insurance company, which became the cornerstone of Berkshire Hathaway’s business strategy.
Under Buffett’s leadership, Berkshire Hathaway adopted a unique investment approach, emphasizing long-term value investing and acquiring undervalued companies with strong fundamentals.
Over the years, Berkshire Hathaway has made numerous acquisitions in various industries, including insurance, consumer brands, utilities, energy, financial services, and more. Some of the notable acquisitions include GEICO, Dairy Queen, Coca-Cola, See’s Candies, Berkshire Hathaway Energy, and Precision Castparts, among many others.
Berkshire Hathaway has also made significant investments in publicly traded companies, such as Apple, Bank of America, American Express, and Wells Fargo, among others.
Berkshire Hathaway has generated substantial profits through its insurance operations, primarily through its insurance float, which is the premium collected upfront but not yet paid out in claims, that Buffett has used to invest in other businesses.
Berkshire Hathaway’s Class A shares, which have never split, have become one of the most expensive stocks in the world, trading at significantly higher prices compared to other stocks.
Berkshire Hathaway has also built a large portfolio of publicly traded stocks and holds significant stakes in various companies.
Buffett has been known for his shareholder letters, where he shares his investment philosophy, business insights, and updates on Berkshire Hathaway’s operations, which are highly regarded by investors and widely followed in the financial community.
Berkshire Hathaway has also been involved in several philanthropic efforts, with Buffett pledging to donate a significant portion of his wealth to charitable foundations, including the Bill and Melinda Gates Foundation.
As of 2021, Berkshire Hathaway’s market capitalization is one of the largest among publicly traded companies, and it is considered one of the most successful conglomerate holding companies in the world.
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In conclusion, Berkshire Hathaway’s financial history is a remarkable story of transformation under Warren Buffett’s leadership. From its origins as a struggling textile manufacturer, Berkshire Hathaway has evolved into a conglomerate holding company with a diversified portfolio of businesses and investments, generating substantial profits and creating significant shareholder value over the years.