Last updated on March 31st, 2021

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Berkshire Hathaway Review

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Berkshire Hathaway is an American conglomerate holding company with impressive business records.

The company fully owns Duracell, GEICO, BNSF, Dairy Queen, Fruit of the Loom, Lubrizol, and a lot more businesses that serve global/local customers.

Berkshire Hathaway also holds significant shares in some public companies, which include American Express, Kraft Heinz Company, The Coca-Cola Company, Apple, and the Bank of America (BOA).

Berkshire Hathaway was founded in 1839 by Oliver Chase, and in the mid-1960s, investor Warren Buffet became the controlling shareholder of the company. Warren Buffet is the current Chairman and CEO of Berkshire Hathaway.

Berkshire Hathaway is not a hedge fund, mutual fund, or ETF. It is simply a holding company for a multitude of businesses. As of June 2020, Berkshire is the ninth-largest public company worldwide in terms of market capitalization.

In September 2020, Berkshire Hathaway's market capitalization was $521.57 billion. It is widely recognized as one of the largest publicly traded companies ever.

Berkshire Hathaway has two asset classes listed on New York Stock Exchange (NYSE) – Class A shares and Class B shares.

Some people view Berkshire as a fund or ETF; however, the company is neither of these.

Although Berkshire somehow operates similarly to hedge funds in terms of stock investments, the company doesn't charge performance fees based on annual positive returns, and this clarifies it as not being a fund organization.

Furthermore, between the late 1990s and 2010s, Berkshire received several honors from different organizations, including being recognized as the “Most respected company” in the world by Barron.

Is Berkshire Hathaway in the S&P 500?

The conglomerate trades as “BRK” in the NYSE, and the CEO, Warren Buffet has managed the company to outperform indexes – beating the S&P 500 index many times between 1999 and 2020.

More so, between 1965 and 2019, Berkshire's stock annual performance was over two times higher than the S&P 500 returns, reaching 2,744,062% overall return while the S&P 500 was around 19,784%.4.

But, in 2010, when the company announced the acquisition of the Burlington Northern Santa Fe Corporation, the parent company of BNSF Railway. It went on to split its class B shares (BRK.B), which led to Berkshire's BRK.B replacing BNSF in the S&P 500.

Note: Berkshire Class B stock(BRK.B) was split 50-to-1 in January 2010. In contrast, Berkshire has never split its Class A stock (BRK.A), because it targets long-term investors other than short-term speculators.

What's Inside Berkshire Hathaway's Portfolio?

Warren Buffet is a typical “buy-and-hold” investor; he follows the principles of value investing, as taught him by Benjamin Graham.

Under Buffet’s management, Berkshire manages quite so many companies, and they are listed below.

CompanyNo of SharesValue (Billion$)
Amazon533,300$1.68
American Express151,610,700$15.20
Apple944,295,554$109.36
Bank of America1,010,100,606$30.62
Bank of New York Mellon Corp84,488,751$2.48
Chevron Corporation48,498,965$0.34
The Coca-Cola Company400,000,000$21.94
General Motors72,500,000$3.02
The Kraft Heinz Company325,634,818$10.61
Marsh & McLennan4,267,825$0.50
Mastercard4,564,756$1.63
Mondelēz International24,669,778$4.70
Moodys Corp24,669,778$7.16
RH1,708,348$0.65
SPDR S&P 500 Trust ETF39,400$0.01
StoneCo Ltd.14,166,748$0.39
Store Capital Corp24,415,168$0.67
Suncor Energy10,758,000$0.35
Synchrony Financial20,128,000$0.53
United Parcel Service (UPS) Class A59,400$0.01
US Bancorp131,961,832$4.73
Vanguard S&P 50043,000$0.01
Verisign Inc12,815,613$2.63
Verizon146,716,496$8.62
Wells Fargo and Co150,407,397$1.58

This report is curled from Berkshire Hathaway's 13F filing on February 16, 2021/2/23. The full list of public companies and ETF holding in the Berkshire portfolio is accessible here.

Is Investing In Berkshire Hathaway Better Than Gold Investing?

Generally, and considering the prowess of Warren Buffet when it comes to investing, it is safe to say that investing in Berkshire Hathaway (BRK.A/BRK.B) is an ideal investment decision to make.

Ever since Buffet became the Chairman and CEO of Berkshire Hathaway, the company keeps appearing on top of the charts and hasn’t stopped acquiring new companies.

This conglomerate owns a massive collection of over 60 subsidiary companies, including big names like GEICO and Duracell. It also owns a portfolio of common stocks and has a market value of over $200 billion.

The stats and reports of the Berkshire Hathaway conglomerate make it appear like a better alternative to gold investment.

Regardless, there are pros and cons to investing in any particular stock. Hence, there is, arguably, no perfect answer to the question of choosing between investing in Gold or Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) stocks, or even an S&P 500 index fund.

Berkshire’s BRK.A vs. BRK.B Stocks

On a quick note, Berkshire's BRK.A and BRK.B stocks have 14.7% annualized average 5-year returns as of January 2021. The major difference between the Class A and Class B shares of Berkshire Hathaway is their price.

As of mid-March 2020, BRK.A is trading at $273,475 per share while BRK.B is trading at $182; there's a huge, significant gap between the two prices. More so, Berkshire had in 2010 split the BRK.B shares, but it's BRK.A share remains untouched.

Berkshire’s introduction of Class B (BRK.B) shares is to provide investors with much easiness in purchasing stock, whereby they can purchase the conglomerate's stock without going through unit trusts or mutual funds.

“…we made this sale in response to the threatened creation of unit trusts that would have marketed themselves as Berkshire lookalikes.” Warren Buffet to shareholders, in his annual letters, in 1996.

The high price of Berkshire's Class A stock is not totally unrelated to his assurance to shareholders that BRK.A stock will never experience a split.

As of February 23, 2021, the current price of Berkshire’s Class A stock is $369,250, while the Class B stock is $245.12.

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What You Should Know About Berkshire’s Shareholders Annual Meeting

Berkshire holds an annual meeting for all its shareholders. The meeting usually holds between May 1 and May 2; it is a 2-day event.

The first day is for drinks and the second day is the actual meeting; however, you can choose to stay back in your hotel apartment for some days more, after the meeting.

This meeting is open to anyone that has at least one share of stock in Berkshire; it could be one share of the company’s Class A stock or Class B stock – anyone you have makes you eligible to attend the meeting.

How To Attend the Meeting

Actually, when you buy BRK.A or BRK.B stock, you become eligible to receive the company’s annual report in hard copy format or electronic format.

Usually, you'd find a perforated proxy card on the back of the hard copy report – that's more like the gate pass for the stakeholders' meetings. Now, pay attention to the steps below:

  • Remove the perforated proxy card
  • Check to attend the meeting
  • Mail-in the card and request passes for the meeting

In contrast, if you got the company’s annual report via email or any other electronic means, reach out to your broker and ask them how you can get the credential/passes to attend the Berkshire annual stakeholders meeting.

Well, the process is more tedious and time-taking when you receive Berkshire's annual report via any electronic means. But all the same, you'd get the credentials that qualify you to get into the meeting hall.

The immediate last meeting was held at the CHI Health Center Omaha (formerly CenturyLink Center) on May 2.

However, the company is looking to hold its 2021 annual meeting as a virtual event, owing to the massive increase in the number of shareholders, and also due to the Covid19 pandemic.

Where To Find The Company’s Annual Report?

Berkshire's shareholders typically receive the company's annual report every year. Also, Warren Buffet sends an annual newsletter to all BRK.A and BRK.B holders.

However, the reports are also available on the company's website for regular investors that wish to study the data in a bid to make investment decisions. All Berkshire Hathaway reports from 1995 to 2020 are available here.

Interestingly, the annual report, which comes along with Buffet’s newsletter, is an easy read.

What May Happen To Berkshire Hathaway After Warren Buffet Retires?

Warren Buffet is now aging past 90 years, and it’s not surprising to see that a lot of people want to know who would succeed him when he retires as the CEO of Berkshire Hathaway.

At the moment, there’s no particular successor to Warren Buffet; however, media and notable figures are making speculations as to who they believe may take over Buffet when he's no more.

Over the years, Warren Buffet’s style of investing is what made Berkshire Hathaway as successful as it is, right now. It is uncertain what investing style Buffet’s successor would practice; hence, predicting Berkshire’s fate at this time can be somehow incoherent.

Berkshire Hathaway Insurance

Berkshire owns several insurance companies and also provides “Specialty Insurance” that covers casualty, commercial property, healthcare professional liability, executive and professional lines, travel, surety, programs, etc.

The company provides global solutions to customers in nearly 170 countries.

Which Industries Does Berkshire Hathaway Have?

Here’s a full list of the many companies owned by Berkshire Hathaway and the industries they belong to.

Clothing Industry

Company NameOwnership %Acquisition Date (YYYY/MM/DD)
Lubrizol100%2011/09/16
Fechheimer Brothers Company100%1986/01/01
Fruit of the Loom100%2002/04/30
Garanimals100%2002/09/04
H.H. Brown Shoe Group100%1991/07/01
Justin Brands100%2000/08/01
Brooks Sports100%2006/08/02

Furniture Related

Company NameOwnership %Acquisition Date (YYYY/MM/DD)
CORT Business Services100%2000/01/14
Jordan's Furniture100%1999/10/11
Larson-Juhl[39]100%2001/12/17
Nebraska Furniture Mart80%1983/01/01
RC Willey Home Furnishings 1995/01/01
Star Furniture100%1997/07/14

Materials and Construction

Company NameOwnership %Acquisition Date (YYYY/MM/DD)
Acme Brick Company100%2000/08/01
Benjamin Moore & Co.100%2001/01/01
Cavalier Homes100%2008/01/01
Clayton Homes100%2007/05/10
Forest River100%2005/08/31
International Metalworking Companies (IMC)100%2006/05/08
Johns Manville100%2001/02/27
MiTek90%2001/06/12
Precision Steel Warehouse, Inc.100%1979/01/01
SE Homes100%2007/01/01
Shaw Industries 2002/01/21

Insurance and Finance

Company NameOwnership %Acquisition Date (YYYY/MM/DD)
BoatUS 2007/07/27
Central States Indemnity100%1992/10/20
GEICO100%1996/08/26
General Re100%1995/12/21
Kansas Bankers Surety Company100%1998/04/10
National Indemnity Company100%1967/03/01
United States Liability Insurance Group100%2000/08/08
Wesco Financial100%1978/01/01
Medical Protective100%2005/06/30

Luxury Items

Company NameOwnership %Acquisition Date (YYYY/MM/DD)
Ben Bridge Jeweler100%2000/07/18
Borsheim's Fine Jewelry100%1989/01/01
Helzberg Diamonds100%1995/01/01

Business Services

Company NameOwnership %Acquisition Date (YYYY/MM/DD)
FlightSafety International100%1997/01/01
NetJets100%1998/01/01
NetJets Europe100%1998/01/01

Food and Beverage

Company NameOwnership %Acquisition Date (YYYY/MM/DD)
Dairy Queen99%1997/10/21
Pampered Chef100%2002/09/23
See's Candies100%1972/01/03

Media

Company NameOwnership %Acquisition Date (YYYY/MM/DD)
Business Wire100%2006/03/01
Omaha World-Herald100%2011/12/01
WPLG-TV100%2014/07/01

Electrical, Electronics, and Electric Distribution

Company NameOwnership %Acquisition Date (YYYY/MM/DD)
NV Energy91.1%2013/12/19
PacifiCorp91.1%2005/01/01
AltaLink91.1%2014/12/01
TTI, Inc.100%2007/03/30

Other Industries

Aerospace and Defense: Precision Castparts Corp. (2016/01/29)

Bond Insurance: Berkshire Hathaway Assurance (2007/12/01)

Capital Goods: CTB Inc. (2002/01/01)

Household Products: Duracell

Logistics: Charter Brokerage (2014/12/12), McLane Company (2003/05/23), BNSF Railway Company (2010/02/12)

Pipeline: Kern River Pipeline (2006/03/21), Northern Natural Gas (2002/08/01)

Mortgage Financing: Berkadia (2009/12/31)

Real Estate: Ebby Halliday Companies (2018/06/04)

Wholesale and Manufacturing: Richline Group (2007/05/01)

Berkshire Hathaway Board of Directors

Currently, the executives of Berkshire Hathaway are as follows:

Chairman and CEO: Warren E. Buffett

Vice-Chairman: Charlie Munger

Other members of the board include:

Walter Scott, Jr. – Former CEO of Peter Kiewit Sons

Howard Graham Buffett (Warren's son) – President of Buffett Farms, CEO of the Howard G. Buffett Foundation

Thomas S. Murphy – Former CEO of Capital Cities/ABC, Inc.

Charlotte Guyman – Former general manager of Microsoft

Ronald Olson – Partner of Munger Tolles & Olson LLP

Kenneth Irvine Chenault – Former CEO of the American Express Company

David Gottesman – Early investor in Berkshire Hathaway

Susan Decker – Former president of Yahoo

Steve Burke – CEO of NBC Universal

Ajit Jain – Vice Chairman of Insurance Operations, Berkshire Hathaway

Meryl Witmer – General Partner at Witmer Asset Management

Greg Abel – Chairman and CEO, Berkshire Hathaway Energy

The one time world's richest man, Bill Gates was among Berkshire board of directors; however, he resigned on March 13, 2020, to “focus more on his philanthropic efforts.” Bill Gates also left Microsoft's board of directors on the same day.

Does Berkshire Pay Dividends To Shareholders?

Berkshire's report for the third quarter of 2019 showed the company smashed an all-time record cash pile of $128 billion.

However, with all the gains and popularity, Berkshire doesn't pay dividends to its shareholders.

One may ask, why?

Well, Warren, being the CEO and chairman “believes that money can be spent in other better ways.”

Berkshire Hathaway is an important diversified holding company. Warren Buffet has been managing this company for quite so long now, and his investment style is the backbone of the company's unrelenting success.

The company does not pay dividends, instead, it reinvests profits into new projects, acquisitions, and/or stocks. Currently, under Buffet as the CEO, the company owns numerous investments in the apparel, private equity, food, real estate, insurance, and utility sectors.

To Warren Buffet, reinvesting is the “top priority” – expanding reach, improving efficiency, and creating new products & services is gainful than focusing on paying dividends.

According to the famed investor and CEO of Berkshire, Buffet, “A profitable company can allocate its earnings in various ways (which are not mutually exclusive).”

Buffet is one of those business leaders who believe that investing back into a business offers more long-term value to shareholders than paying them dividends. This is because a company's success rewards the shareholders with higher stock values.

Speculatively, for as long as Warren Remains in charge of Berkshire, the company is liable not to pay dividends; however, investors have much more to gain from holding the BRK stocks.

One time in 1967, Berkshire did paid dividends, and Buffet later joked at it, saying that he must have been in the bathroom when the decision was made.

Summary:

This Berkshire Hathaway review looks to explain every important piece of information you may need to know about the company. It is still headed by Warren Buffet at the time of publishing this article.