Berkshire Hathaway
Type: Public (NYSE: BRKA, NYSE: BRKB)Founded: 1965 (since current management took over), 1888 (when Hathaway Manufacturing was founded)
Headquarters: Omaha, Nebraska
Key people: Warren Buffett, Chairman & CEO, Charlie Munger, Vice Chairman
Industry: Property and casualty insurance, Diversified investments
Products: Conglomerate focused on insurance
Website: www.berkshirehathaway.com
General Information
Berkshire Hathaway (NYSE: BRKA, NYSE: BRKB) is a holding company headquartered in Omaha, Nebraska, U.S., that oversees and manages a number of subsidiary companies. Berkshire Hathaway's core business is insurance, including property and casualty insurance, reinsurance and specialty nonstandard insurance. The Company averaged a phenomenal 25%+ annual return to its shareholders for the last 25 years while employing large amounts of capital and minimal debt.Warren Buffett is the company's chairman and CEO. Buffett has used the 'float' provided by Berkshire Hathaway's insurance operations (a policyholder's money which it holds temporarily until claims are paid out) to finance his investments. In the early part of his career at Berkshire, he focused on long-term investments in publicly quoted stocks, but more recently he has turned to buying whole companies. Berkshire now owns a diverse range of businesses including candy production; retail, home furnishings, encyclopedias, vacuum cleaners, jewelry sales; newspaper publishing; manufacture and distribution of uniforms; and manufacture, import and distribution of footwear.
Financial
Berkshire Hathaway was founded as a textile manufacturing company in 1839 as the Valley Falls Company in Valley Falls, Rhode Island by Oliver Chace, the progenitor of a well-known Yankee family. Chace had previously worked for Samuel Slater, the 'father of the industrial revolution,' and founded his first textile mill in 1806. In 1929 the Valley Falls Company merged with Berkshire Fine Spinning Associates, another textile company that was founded as the Berkshire Cotton Manufacturing Company in Adams, Massachusetts in 1889. The combined company was known as Berkshire Fine Spinning Associates.In 1955 Berkshire Spinning merged with the Hathaway Manufacturing Company which was founded in 1888 in New Bedford, Massachusetts by Horatio Hathaway as a cotton milling business. Hathaway was successful in its first decades, but it suffered during a general decline in the textile industry after World War I. At this time, Hathaway was run by Seabury Stanton, whose investment efforts were rewarded with renewed profitability after the Depression. After the merger, Berkshire Hathaway had 15 plants employing over 12,000 workers with over $120 million in revenue and was headquartered in New Bedford, Massachusetts. However, seven of those locations were closed by the end of the decade, accompanied by large layoffs.
In 1962, Warren Buffett began buying stock in Berkshire Hathaway. After some clashes with the Stanton family, he bought up enough shares to change the management and soon controlled the company.
Buffett initially maintained Berkshire's core business of textile milling, but by 1967, he was expanding into the insurance industry and other investments. Berkshire first ventured into the insurance business with the purchase of National Indemnity Company. In the late 1970s, Berkshire acquired an equity stake in the Government Employees Insurance Company (GEICO), which forms the core of its insurance operations today (and is a major source of capital for Hathaway's other investments). In 1985, the last textile operations (Hathaway's historic core) were shut down.