1. Warren Buffett: His Life and Education
  2. Warren Buffett: Success Story
  3. Warren Buffett: Net Worth & Current Influence
  4. Warren Buffett: Most Influential Quotes

Warren Buffett’s name is practically synonymous with his biggest success: Berkshire Hathaway (BRK.A). Warren became an integral part of Berkshire Hathaway in the early 1960s and helped the company expand into one of the largest conglomerates in the world. In 1956, his path to success began to accelerate when he moved back to Nebraska with his family. 

Before working for Benjamin Graham, Warren had been an investment salesman – a job that he liked doing, except when the stocks he suggested dropped in value and lost money for his clients. To minimize the potential of having irate clients, Warren started a partnership with his close friends and family. The partnership had unique restrictions attached to it: Warren himself would invest only $100 and, through re-invested management fees, would grow his stake in the partnership. Warren would take half of the partnerships gains over 4% and would repay the partnership a quarter of any loss incurred. Furthermore, money could only be added or withdrawn from the partnership on December 31st, and partners would have no input about the investments in the partnership. 

By 1959, Warren had opened a total of seven partnerships and had a 9.5% stake in more than a million dollars of partnership assets. Three years later, Warren was now a millionaire and merged all of his partnerships into a single entity.

In 1962, Warren saw an opportunity to invest in a New England textile company called Berkshire Hathaway and bought some of its stock. Warren began to aggressively buy shares after a dispute with its management convinced him that the company needed a change in leadership. Ironically, the purchase of Berkshire Hathaway is one of Warren’s major regrets. (For more, see: Always Bet On Berkshire Hathaway.)

Understanding the beauty of owning insurance companies – clients pay premiums today to possibly receive payments decades later – Warren used Berkshire Hathaway as a holding company to buy National Indemnity Company (the first of many insurance companies he would buy) and used its substantial cash flow to finance further acquisitions.

As a value investor, Warren is a sort of Jack-of-all-trades when it comes to industry knowledge. Berkshire Hathaway is a great example. Buffett saw a company that was cheap and bought it, regardless of the fact that he wasn’t an expert in textile manufacturing. Over the decades, Warren has bought, held and sold companies in a variety of different industries.

Some of Berkshire Hathaway’s most well-known subsidiaries are, but not limited to, GEICO (yes, that little Gecko belongs to Warren Buffett), Dairy Queen, NetJets, Benjamin Moore & Co., and Fruit of the Loom. Again, these are only a handful of companies of which Berkshire Hathaway has a majority share.

The company also has interests in many other companies, including American Express Co. (AXP), Costco Wholesale Corp. (COST), DirectTV (DTV), General Electric Co. (GE), General Motors Co. (GM), Coca-Cola Co. (KO), International Business Machines Corp. (IBM), Wal-Mart Stores Inc. (WMT), Proctor & Gamble Co. (PG) and Wells Fargo & Co. (WFC).

(related: How Does Warren Buffett Choose The Companies He Buys?)

Business for Buffett hasn’t always been rosy though. In 1975, Buffett and his business partner, Charlie Munger, were investigated by the Securities and Exchange Commission (SEC) for fraud. The two maintained that they had done nothing wrong and that the purchase of Wesco Financial Corporation only looked suspicious because of their complex system of businesses. 

Further trouble came with a large investment in Salomon Inc. In 1991, news broke of a trader breaking Treasury bidding rules on multiple occasions, and only through intense negotiations with the Treasury did Buffett manage to stave off a ban on buying Treasury notes and subsequent bankruptcy for the firm.

In more recent years, Buffett has acted as a financier and facilitator of major transactions. During the Great Recession, Warren invested and lent money to companies that were facing financial disaster. Seven years later, the effects of these transactions are surfacing and they’re enormous:

  • A loan to Mars Inc. resulted in a $680 million profit
  • Wells Fargo & Co. (WFC), of which Berkshire Hathaway bought almost 120 million shares during the Great Recession, is up 6.75 times from its 2009 low
  • American Express Co. (AXP) is up about five times since Warren’s investment in 2008
  • Bank of America Corp. (BAC) pays $300 million a year and Berkshire Hathaway has the option to buy additional shares at around $7 each – less than half of what it trades at today
  • Goldman Sachs Group Inc. (GS) paid out $500 million in dividends a year and a $500 million redemption bonus when they repurchased the shares.

Most recently, Warren has partnered up with 3G Capital to merge J.H. Heinz Company and Kraft Foods to create the Kraft Heinz Food Company (KHC). The new company is the third largest food and beverage company in North America and fifth largest in the world, and boasts annual revenues of $28 billion.

Modesty and quiet living meant that it took Forbes some time to notice Warren and add him to the list of richest Americans, but when they finally did in 1985, he was already a billionaire. Early investors in Berkshire Hathaway could have bought in as low as $275 a share and by 2014 the stock price had reached $200,000, and was trading around $220,000 earlier this year.


Warren Buffett: Net Worth & Current Influence
Related Articles
  1. Insights

    Warren Buffett Biography

    Warren Buffett is one of the top investors in the world. Learn more about his amazing life and path to success.
  2. 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.
  3. Investing

    What is Warren Buffett's Net Worth In 2015?

    How much is Warren Buffet worth in 2015 and what holdings does he have?
  4. Investing

    Berkshire's Record Cash Guarantees More Deals (BRK-B)

    Warren Buffett's Berkshire Hathaway is sitting on more than $70 billion in cash, almost guaranteeing what will happen next: more big acquisitions.
  5. Insights

    Who is Driving Berkshire Hathaway's Management Team? (BRK.B)

    A look into Berkshire Hathaway’s core management team and how they work together to deliver consistent returns over the long term.
  6. Investing

    Why Hedge Fund Managers are Loving Buffett

    Berkshire Hathaway was a favorite among hedge fund managers last year. What is the draw at this particular point in time?
  7. Investing

    Berkshire 13F: Warren Buffett Adds Apple, Sheds IBM

    The "Oracle of Omaha" stocked up on Apple and reduced his stake in IBM, according to 13F filings.
  8. 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.
Frequently Asked Questions
  1. What Was the First Company to Issue Stock?

    The Dutch East India Co. held an IPO in 1602, making it the first company to issue stock.
  2. When Does a Corporation Decide to Refinance Debt?

    Favorable market conditions or the strengthening of a credit rating may lead to refinancing.
  3. What Is an Odd-Lot Buyback?

    Odd-lot buybacks involve lots of less than 100 shares. Learn how companies get these shares back.
  4. Can I buy a house directly from Fannie Mae (FNMA)?

    Yes, Fannie Mae does sell properties it's foreclosed on; each property is sold in "as is" condition.
Trading Center