50 Facts About Berkshire Hathaway

Berkshire Hathaway's Humble Beginnings

Berkshire Hathaway's journey from a small textile manufacturer to a global conglomerate is nothing short of fascinating. Let's dive into its early days and see how it all began.

1. Berkshire Hathaway's roots date back to 1839 with the founding of the Valley Falls Company, a textile manufacturer.
2. Over the years, the company underwent several mergers, including with Berkshire Cotton Manufacturing Company in 1929 and Hathaway Manufacturing in 1955.
3. Initially, Berkshire Hathaway was a textile manufacturer, producing cotton and other fabrics.

Warren Buffett's Transformative Acquisition

Warren Buffett's involvement with Berkshire Hathaway marked a turning point in its history. His strategic moves and visionary leadership transformed the company.

4. Warren Buffett purchased Berkshire Hathaway in 1965, taking control of the company and transforming it into a holding conglomerate.
5. One of Buffett's earliest and most strategic moves was the acquisition of National Indemnity, an insurance company.
6. This marked the beginning of Berkshire Hathaway's expansion into the insurance sector, which would become a cornerstone of its success.

The Power of Float

The concept of "float" has been a key factor in Berkshire Hathaway's spectacular returns over the years. Let's explore what float is and how it works.

7. Berkshire Hathaway's lifeblood is the concept of "float," which refers to the money paid to its insurance subsidiaries in premiums that has yet to be used to cover claims.
8. This float is available for investment and has been a key factor in the company's spectacular returns over the years.
9. As of 2023, Berkshire Hathaway's float was approximately $168.9 billion.

Diversification and Notable Holdings

Under Buffett's leadership, Berkshire Hathaway has diversified its holdings across various industries. Here are some of its most notable investments.

10. Berkshire Hathaway has diversified its holdings across various industries, including financial services, clothing, entertainment, food and beverage, utilities, furniture, household products, media, and materials and construction.
11. Some of Berkshire Hathaway's most notable holdings include GEICO, Duracell, Fruit of the Loom, and Apple.
12. Berkshire Hathaway's stake in Apple is particularly noteworthy. As of 2021, the value of Berkshire's Apple shares was $161.2 billion.
13. Berkshire Hathaway also holds a significant stake in American Express, with 151.6 million shares as of early 2022.
14. Warren Buffett acquired a stake in Bank of America through warrants he acquired by investing in preferred shares of the stock in 2017.

Financial Strength and Investment Strategy

Berkshire Hathaway's financial strength and investment strategy have played a crucial role in its success. Let's take a closer look at these aspects.

15. Berkshire Hathaway has significantly increased its holdings in short-term Treasury bills, with a total of $277 billion as of the end of the second quarter in 2024.
16. Berkshire Hathaway generates substantial operating cash flow, ranging from $12 billion to $13 billion each quarter.
17. Warren Buffett's investment strategy is centered around value investing. He looks for companies with a long history of paying dividends and often buys up troubled businesses to turn them around.
18. Berkshire Hathaway does not pay dividends to its shareholders. Instead, the company reinvests its earnings in other businesses.

Employee Base and Management Structure

Berkshire Hathaway's unique management structure and large employee base have contributed to its efficient operations. Here's how.

19. As of 2021, Berkshire Hathaway employed 371,653 people, making it one of the largest employers in the world.
20. Despite its massive size, Berkshire Hathaway's headquarters office is relatively small, with only 25 people working there.
21. Berkshire Hathaway is made up of 57 distinct subsidiary businesses, not including the 25 smaller companies it has acquired as "bolt-on" investments.
22. Berkshire Hathaway's Burlington Northern Santa Fe subsidiary carries about 15% of all inter-city freight in the U.S.

Impressive Financial Performance

Berkshire Hathaway's financial performance over the years has been nothing short of impressive. Let's delve into some key figures.

23. In 2021, Berkshire Hathaway's total annual revenue was $276.1 billion, with annual earnings amounting to $89.7 billion.
24. Forbes ranked Berkshire Hathaway first on its Global 2000 list in April 2022, due to its massive assets and revenue.
25. In 2021, Berkshire Hathaway wrote $65.3 billion in property and casualty premiums, while life and health premiums totaled $6.3 billion.
26. As of June 30, 2022, Berkshire Hathaway's total liabilities were $440.207 billion, representing a 1.5% increase year-over-year.
27. Berkshire Hathaway’s latest twelve months current ratio is 1.4x, indicating a strong liquidity position.

Historical Performance and Returns

Berkshire Hathaway's historical performance and returns have set it apart from other companies. Let's explore some key milestones.

28. Under Buffett's leadership, Berkshire Hathaway has outperformed the S&P 500 for 44 consecutive years from 1964 to 2008.
29. The company has achieved an average compound annual growth rate (CAGR) of 20.5% from its inception to 2018.
30. Between 1965 and 2022, Berkshire Hathaway generated an annualized return of 19.8%, nearly twice the 10.2% average total return of the S&P 500 over the same period.
31. Berkshire Hathaway’s portfolio includes more than 50 stocks and ETFs, with Apple alone accounting for over 46% of the total value as of the first quarter of 2024.
32. Despite owning scores of equities, very few are individually material to performance. Buffett’s strategy is to focus on a few winners.

Unique Investment Philosophy

Warren Buffett's unique investment philosophy has been instrumental in Berkshire Hathaway's success. Here's what sets it apart.

33. Buffett’s investment philosophy emphasizes the importance of starting early and living into your 90s, as he has done.
34. Berkshire Hathaway has paid only one dividend in its history, a $0.10 per share payout in 1967.
35. Berkshire Hathaway’s annual meeting is known for its unique employee engagement activities. In 2013, shareholders bought 1,062 pairs of Justin Boots, 12,792 pounds of See’s candy, 11,162 Quikut knives, and 6,344 pairs of Wells Lamont gloves during the nine-hour meeting.

Market Capitalization and Milestones

Berkshire Hathaway's market capitalization and historical milestones highlight its growth and success. Let's take a look.

36. As of July 15, 2024, Berkshire Hathaway’s market capitalization exceeded $900 billion, with Class A stock trading above $650,000 per share.
37. Berkshire Hathaway has a rich history, with milestones such as the acquisition of Fruit of the Loom in 2002 for $835 million after its stock lost 97% of its value.
38. Warren Buffett’s mentor, Benjamin Graham, emphasized the importance of dividends. Many of Berkshire Hathaway’s large holdings, such as Apple, Coca-Cola, and American Express, have a steady history of paying and maintaining or increasing dividends every year.

Float as a Funding Source

The float concept is crucial to Berkshire Hathaway’s success. Let's explore how it works and its impact.

39. The money taken in as insurance premiums before it is needed to pay claims acts as a cost-free or even better-than-cost-free funding source.
40. This float has been instrumental in generating spectacular returns for more than fifty years.

Investment Universe and Interest Rate Risk

Berkshire Hathaway's investment universe and approach to interest rate risk have shaped its strategy. Here's how.

41. While Buffett’s actions suggest there aren’t as many bargains in the stock market as there once were, there are still plenty of great stocks to buy in the current environment.
42. The inverted yield curve has led to higher yields for short-term bonds compared to long-term bonds.
43. Buffett prefers short-term Treasury bills over longer-dated government bonds due to their lower interest-rate risk.

Flexibility and Decentralized Management

Berkshire Hathaway's investment flexibility and decentralized management structure have contributed to its success. Let's see how.

44. Berkshire Hathaway’s abundance of cash and diverse stream of non-insurance earnings provide it with far more investment flexibility than other companies in the industry.
45. Buffett’s decentralized management structure entrusts business unit leaders to make decisions with minimal bureaucracy.

Employee Numbers and Subsidiary Businesses

Berkshire Hathaway's employee numbers and subsidiary businesses reflect its significant presence in various industries. Here's a closer look.

46. As of 2013, Berkshire Hathaway employed 330,745 people.
47. Berkshire Hathaway operates 57 distinct subsidiary businesses, not including the smaller companies it has acquired as bolt-on investments.
48. Berkshire Hathaway’s Burlington Northern Santa Fe subsidiary carries about 15% of all inter-city freight in the U.S.

Revenue Growth and Financial Health

Berkshire Hathaway's revenue growth and financial health highlight its strong performance. Let's explore some key figures.

49. Berkshire Hathaway’s annual revenue has grown significantly over the years, reaching $276.1 billion in 2021.
50. As of 2021, Berkshire Hathaway’s stockholders’ equity stood at $514.9 billion, reflecting the company’s strong financial position.

Berkshire Hathaway's Legacy

Berkshire Hathaway's journey from a textile manufacturer to a global powerhouse is nothing short of remarkable. Warren Buffett's strategic vision and investment acumen transformed the company into a diversified conglomerate with interests in insurance, transportation, utilities, and more. Key moves like acquiring National Indemnity and leveraging the concept of "float" have been pivotal. The company's impressive portfolio, including stakes in Apple and American Express, showcases its investment prowess. Despite its massive scale, Berkshire maintains a lean headquarters, emphasizing decentralized management. With a market cap exceeding $900 billion and a history of outperforming the S&P 500, Berkshire Hathaway stands as a testament to the power of strategic investment and visionary leadership. Its continued success and adaptability ensure it remains a dominant force in the business world for years to come.