"Please, tell me again about re-insurance..."

All You Need to Know About Berkshire Hathaway

April 6 by Ben Brown

Company: Berkshire Hathaway is one of those monster companies that owns (and invests in) lots of other firms. It owns a slice of more than 80 businesses, including Apple, American Express and Coca-Cola. But that’s not how it started out. In fact, it was once a humble textile company. It formed when ‘Berkshire Fine Spinning’ and ‘Hathaway Manufacturing’ got together behind the bikesheds. They formed – you guessed it – ‘Berkshire Hathaway.’ At first, the company wasn’t very successful. At least, not until star-investor Warren Buffett took over in the 1960s. He turned the textile company into the billion-dollar investment conglomerate it is today.

warren buffet

The Boss: Investment titan, Warren Buffett. The 86-year-old is worth approximately $79 billion and, despite his age, he’s not looking to slow down anytime soon. (The man still necks five cans of coke every day!) According to the Forbes Rich List, he’s the third-richest man on the planet. Buffett’s investment plan is simple: he snaps up companies with a straightforward business model when they’re dirt-cheap. If they have a stable cash-flow, even better. The “Oracle of Omaha” is so successful that he regularly beats the leading US index, the Dow Jones. (No mean feat!)

Main Moneymakers: The big investments, like Apple, certainly make a pretty penny for Berkshire Hathaway. However, it’s the ‘boring’ industries of insurance and reinsurance that bring in the megabucks. For example, The Berkshire Hathaway Reinsurance Group is the world market leader. Wait, what’s reinsurance? It’s basically a company that insures insurance companies. (Kill me now).

Berkshire Hathaway

Competition: Other mixed conglomerates, like Danaher Corporation.

Revenue: $223.6 billion (2016)

Red Flags: Sometimes, Buffett lacks the nose for tech companies. Although he does have shares of Apple in the vault, he only purchased them last year. And he famously turned down the chance to invest in Amazon. When CNBC asked him about this decision, he simply said “I don’t have a good answer.” Still, this hasn’t made much of a dent in Berkshire Hathaway. The company has turned in almost-flawless results since 1997.

Future Bets: Buffy’s knack for the market is second-to-none. So long as his feet remain under the desk, Berkshire Hathaway is in safe hands. Additionally, the company is very broadly positioned (or diversified) and therefore well-prepared if another financial crisis comes along. Berkshire Hathaway recovered quickly from the 2008 banking crash, for example. Alas, there is still no obvious successor if Buffett decides he’d like to retire.

Fun Fact: Berkshire Hathaway’s ‘A Class share’ (the premium stock available to investors) is the most expensive in the world. It currently costs about 245,000 euros. There is also a B share, which costs around 164 euros.

You can trade Berkshire Hathaway with BUX!

Written by

Ben Brown

Ben is one of our writers on the ground in London. By day he writes sensible news stories for The Huffington Post. By night, he injects fierce wit into the stock market at BUX.

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