What is Berkshire Hathaway
Berkshire Hathaway is a holding company for a multitude of businesses, run by its famous Chairman and CEO, Warren Buffett. Berkshire Hathaway is headquartered in Omaha, Nebraska, and began as a group of textile milling plants. 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. In 2017, Berkshire Hathaway had a market capitalization of close to $488 billion, one of the top five largest publicly traded companies worldwide.
Insurance subsidiaries tend to represent the largest pieces of Berkshire Hathaway, but the company now 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 $250,000 per share in 2017.
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, Buffet’s 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.
In 2017, Berkshire Hathaway subsidiaries included GEICO, Dairy Queen, BNSF Railway, Lubrizol, Fruit of the Loom, Helzberg Diamonds, Long & Foster, FlightSafety International, Pampered Chef, and NetJets. In addition the holding company has a 38.6% stake in Pilot Flying, a 26.7% stake in the Kraft Heinz Company, a ~17% minority holding in American Express, 9.4% minority stake in The Coca-Cola Company (9.4%), and 2.5% minority stake in Apple, among other well known firms.
The Future of Berkshire Hathaway
Nearing his 80th birthday in May 2010, CEO and Chairman Warren Buffet announced he would be succeeded at Berkshire Hathaway by a team, comprised of one CEO and 2-4 investment managers. In 2011, it was announced that Castle Point hedge fund manager Todd Combs would become one of these investment managers; along with Peninsula Capital Advisors Ted Weschler. Buffet has yet to name his CEO replacement.