What is 'Berkshire Hathaway'

Berkshire Hathaway is a holding company for a multitude of businesses run by Chairman and CEO Warren Buffett. Berkshire Hathaway is headquartered in Omaha, Nebraska and began as just a group of textile milling plants, but when Buffett became the controlling shareholder in the mid 1960s he began a progressive strategy of diverting cash flows from the core business into other investments.

Insurance subsidiaries tend to represent the largest pieces of Berkshire Hathaway, but the company manages hundreds of diverse businesses all over the world.

BREAKING DOWN 'Berkshire Hathaway'

Because of Berkshire Hathaway's long history of operating success and keen stock market investments, the company has grown to be one of the largest in the world in terms of market capitalization. Berkshire stock trades on the New York Stock Exchange in two classes, A shares and B shares. The A shares are noted for their very high prices - in excess of $100,000 per share in 2007.

Early in his career Buffett came across the novel idea to use the "float" from his insurance subsidiaries to invest elsewhere, mainly into focused stock picks that would be held for the long term. Buffett has long eschewed a diversified stock portfolio in favor of a handful of trusted investments that would be overweighted in order to leverage the anticipated return. Over time, his investing prowess became so noted that Berkshire's annual shareholder meetings became a mecca for value investing proponents and the focus of intense media scrutiny.

RELATED TERMS
  1. Warren Buffett

    Known as "the Oracle of Omaha", Buffett is Chairman of Berkshire ...
  2. Baby Berkshire

    Baby Berkshire refers to the 50:1 stock split after the market ...
  3. Holdings

    The contents of an investment portfolio held by an individual ...
  4. Oracle Of Omaha

    A nickname for Warren Buffett, who is arguably one of the greatest ...
  5. Charlie Munger

    The Vice-Chairman of Berkshire Hathaway Corporation, the diversified ...
  6. Subsidiary

    A company whose voting stock is more than 50% controlled by another ...
Related Articles
  1. Retirement

    Is Berkshire Hathaway Stock Suitable for Your IRA or Roth IRA? (BRK.B, BRK.A)

    Discover how Warren Buffett's Berkshire Hathaway is structured and if the company is appropriate for individual retirement accounts.
  2. Investing

    If You Had Invested Right After Berkshire Hathaway's IPO (BRK.A)

    Learn how much you would now have if you had invested right after Berkshire Hathaway's IPO, and find out the classes of shares that you could invest in.
  3. Managing Wealth

    How Warren Buffett made Berkshire Hathaway a World-beater

    It would almost be easier to list the industry sectors in which Omaha-based Berkshire Hathaway Inc. (NYSE:BRK.A) doesn’t turn gargantuan profits.
  4. Investing

    6 Wholly Owned Subsidiaries of Berkshire Hathaway (BRK.A, BRK.B)

    A look at some of the more than 50 privately held companies completely owned by Berkshire Hathaway.
  5. Insights

    How Warren Buffett Made Berkshire A Winner

    Berkshire Fine Spinning Associated and Hathaway Manufacturing Company merged in 1955 to form Berkshire Hathaway.
  6. Investing

    Where Does Warren Buffett Keep His Money?

    Understand who Warren Buffett is and how he made most of his net worth. Learn about the main places and investment vehicles where Buffett keeps his money.
  7. Financial Advisor

    Berkshire Hathaway's 4 Most Profitable Lines of Business (BRK-A, BRK-B)

    Learn about Warren Buffett and his company Berkshire Hathaway. Understand why the four companies listed are his most important and profitable lines of business.
  8. Investing

    Is Berkshire Hathaway Stock Undervalued? (BRK-A)

    Find out why Berkshire Hathaway stock may be undervalued when the company has an overall growth business, something that should support a premium valuation.
  9. Investing

    How to Attend Berkshire Hathaway's Annual Meeting (BRK.A, BRK.B)

    An overview of what is required to go to the Berkshire Hathaway Annual General Meeting.
RELATED FAQS
  1. What was the worst investment Warren Buffett made in his career?

    Discover what Warren Buffett's surprising answer is to the question of what was the single worst investment that the "oracle ... Read Answer >>
  2. How does the "Buffett Premium" increase Berkshire Hathaway's stock price?

    Explore the theory that Berkshire Hathaway stock carries a Warren "Buffet Premium" that would disappear upon his death and ... Read Answer >>
  3. Why doesn't Warren Buffett split Berkshire Hathaway stock?

    Understand Warren Buffet's fundamental approach to investing and learn why his basic investment strategy explains his no-split ... Read Answer >>
  4. What is Warren Buffett's annual salary at Berkshire Hathaway?

    Learn more about how much Warren Buffett receives in salary and how he continues to stay involved with his company and his ... Read Answer >>
  5. Why doesn't Berkshire Hathaway pay a dividend?

    Learn why Berkshire Hathaway, despite being flush with cash, does not pay dividends and how its CEO feels that not paying ... Read Answer >>
  6. Why does Berkshire Hathaway prefer to buy back shares instead of paying dividends?

    Learn why Berkshire Hathaway, the company owned by billionaire Warren Buffett, prefers stock buybacks over paying its shareholders ... Read Answer >>
Hot Definitions
  1. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  2. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  3. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  4. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  5. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  6. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
Trading Center