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Berkshire Hathaway

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Berkshire Hathaway, Inc was a small textile company. Its chairman and CEO of the company is Warren Buffett, the world's third richest man. He invested his partnership in invests in Berkshire Hathaway at the price of $8.6 million (The Essential Buffett, p27). It took him over 35years to grow its book value from $19 per share to $37,987 per share with a rate of 24 percent compounded annually (The Essential Buffett, p44). Buffett started purchasing other businesses, which were primarily insurance companies, with profits from the declining original textile business. In 1985, the original textile business was shut down and Berkshire Hathaway started the insurance business.

Now, Berkshire Hathaway is primarily an insurance company, which holds 73 businesses. According to Robert G. Hagstrom, the company owns an investment portfolio that consists of a newspaper, a candy company, an ice cream/hamburger chain, several furniture stores, a carpet manufacture, a paint company, a building-products company, a company that private jets to businesses on a time-share basis, a jewelry store, an encyclopedia publisher, a vacuum cleaner business, a public utility, a couple of shoe companies, and a company that manufactures and distributes uniforms.

Over 217,000 employees work for the 73 businesses with the annual revenues of $98.539 billion in 2006 (Yahoo finance, 2007). However, only 19 employees work at home office located in Omaha. One of the companies that Berkshire Hathaway holds is GIECO (Government Employees Insurance Company). In 1994, GIECO was wholly owned by Berkshire Hathaway. Its market share was increased from 2.7 percent to 4.1 percent with additional $590 million in cash from operating earnings in spite of decline in in...

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...n offsets the negative return in 2002. The next three returns for investors of Berkshire Hathaway are 4.33%, .82%, and 24.11%. You can realize these returns in Exhibit 9.

Berkshire Hathaway is a company that consists of many investors and managers that contribute to its success. The Chairman and CEO of Berkshire is Warren Buffett, the man most famous for the company's success. Charlie Munger is next in line as the Vice President of Berkshire. Charlie is a good friend to Warren and is considered the one to teach Warren how to invest in quality companies, not just undervalued ones. Bill Gates is also one of the directors at Berkshire, he is the chairman of the board of directors at Microsoft Co. These are just a couple of the people who help Berkshire run effectively and efficiently. The main list of key managers of Berkshire Hathaway can be found in Exhibit 10.
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