Virtually everyone is aware of the great investor Warren Buffett and his company Berkshire Hathaway Inc. (NYSE:BRK). Many others are aware of the incredible stock price of Berkshire Class A stock, which surpassed $200,000 per share in August of 2014 (and is trading above $215,000 as of this writing) because Buffett refuses to split stocks — but do you know how Berkshire Hathaway grew into the massive conglomerate that it is today, and which companies Berkshire either owns or invests in?
First, a history lesson. Berkshire Hathaway was a textile company with roots in the 1800's, created in a merger of the Hathaway Company with Berkshire Fine Spinning Associates Inc. Buffett began buying shares in 1962, believing the company to be undervalued, and eventually purchased enough stock to take control of the company.
While Berkshire held on to the textile business until 1985, he began to diversify into insurance — a relatively safe industry with plenty of available cash to be used for other investment vehicles. Thus began Buffett's career as the premier value investor of our time. Not only does Berkshire have well-known insurance companies in their group, it also does a significant trade through its re-insurance operations that provide protection against large insurance payouts (in other words, the insurance companies for insurance companies).
Despite the diverse holdings, a significant part of Berkshire Hathaway remains rooted in well-established American legacy businesses and brands. Berkshire owns Fruit of the Loom, Acme Brick, Justin Boots and Benjamin Moore paints, all of which were established in the late 1800s. Among the other Berkshire-owned companies are the well-known Dairy Queen, Geico Insurance, See's Candies, Helzberg Diamonds, Nebraska Furniture Mart, and the Burlington Northern (BNSF) railroad line. According to the Wall Street Journal, nine of Berkshire's wholly owned companies would be included in the Fortune 500 by themselves if they were independent organizations. The conglomerate is back in the news for acquiring Precision Castparts, which makes components for aircraft, power plants and other industrial uses, for more than $32 billion.
Berkshire also has multiple media holdings outside of the major metropolitan dailies and national newspapers. BH Media Group owns over 70 print media outlets in mid-sized and smaller cities across America, including the Tulsa World, the Waco Tribune, the Winston-Salem Courier, the Richmond Gazette — and, of course, Buffett's hometown Omaha World-Herald.
Aside from their wholly owned subsidiaries, Berkshire owns large stakes in many other well-known companies. Among the stock holdings Berkshire owns are a 14.88% interest in American Express (NYSE:AXP), 9.16% of Coca-Cola (NYSE:CO), and 7.82% of IBM (NYSE:IBM). The largest total number of shares owned in any one company without direct ownership is Berkshire's 9.01% holding in Wells Fargo (NYSE:WFC). As of the stock filing at the end of 2014, Berkshire owned over 463 million shares of Wells Fargo stock, or just over 23% of the portfolio.
Only 47 stocks were listed in Berkshire's portfolio as of December 2014, but they are mostly a who's who of iconic business brands. These holdings include Wal-Mart (NYSE:WMT), Procter & Gamble (NYSE:PG), Goldman Sachs (NYSE:GS), John Deere (NYSE:DE), General Motors (NYSE:GM), Verizon (NYSE:VZ), Visa (NYSE:V), Costco (NASDAQ:COST), Johnson and Johnson (NYSE:JNJ), and Kraft Foods (NASDAQ:KRFT). Kraft's upcoming merger with H.J. Heinz would give Berkshire almost 25% of the stock in the combined company. (Insert your own joke about macaroni and cheese with ketchup here.)
You can find the complete list of Berkshire Hathaway stock holdings at several places online, along with many pitches to learn how to invest like the Oracle of Omaha. If you'd rather just buy Berkshire stock but cannot afford six figures for a single share, you can buy Class B stock for a more reasonable $144 per share (as of this writing). Don’t hold your breath waiting for a split of the Class A stock.
Following Buffett's principles of value investing may well help you build a solid portfolio, but just remember — there's a reason there's only one Berkshire Hathaway and Warren Buffett. It's not as easy as he makes it look.