Berkshire Hathaway

Definition

Berkshire Hathaway Inc. is a holding company with numerous businesses under its umbrella, including GEICO and Fruit of the Loom. It is led by Chairman and CEO Warren Buffett and is headquartered in Omaha, Nebraska.

Origin

Originally, it was a company composed of a group of textile mills. In 1965, Buffett took over this struggling New England company. Since then, Berkshire Hathaway has grown to become one of the largest companies by market capitalization in the world.

Categories and Features

As a holding company, Berkshire Hathaway has a diversified portfolio that spans insurance, railroads, energy, manufacturing, retail, and more. It is characterized by its long-term holding and value investing strategies to achieve capital appreciation. The company is renowned for its prudent financial management and investments in high-quality businesses.

Case Studies

A typical case is Berkshire's investment in Coca-Cola. In 1988, Buffett began purchasing Coca-Cola stock, eventually becoming one of its largest shareholders. This investment is seen as a model of successful long-term holding strategy. Another case is the investment in Apple Inc., where Berkshire started buying Apple shares in 2016, quickly becoming one of its largest shareholders, which also brought significant returns to Berkshire.

Common Issues

Investors often misunderstand Berkshire Hathaway's high stock price, thinking its shares are unsuitable for small investors. In reality, Berkshire offers Class B shares, which are more affordable. Additionally, investors might underestimate the stability and long-term growth potential of its diversified portfolio.