Founding Date: 1839
Company Name: Berkshire Hathaway
Country: Rhode Island, United States
Company Website: berkshirehathaway.com
A mega multi-national company, Berkshire and Hathaway is one of the largest conglomerate industries, headquartered in Nebraska in the United States of America. The company is the owner of GEICO, BNSF Railway, Lubrizol, Dairy Queen, Fruit of the Loom, HelzBerg Diamonds, FlightSafety International,, Pampered Chef, NetJets, Kraft and Heinz, and Mars Inc. It is the fourth largest company in the world owing fields like confectionary, retail, home furnishings, newspaper publishers, jewelry, vacuum cleaners, gas utilities, distribution of uniforms, and the list is endless. Upon a Google search, one can find sites like buffetsecrets.com, the Wikipedia page, the official website and various images of the logo and company executives.
The Conception of Berkshire Hathaway
The Hathaway Manufacturing Company was started in 1888 by Horatio Hathaway, a China trader, with profits from whaling in the Pacific. The business of the company was to mill cotton and it made big profits until the start of the decline of the cotton industry after World War 1.Seabury Stanton, who put much of his own money into the company to keep it going, ran it during these years.After the Depression, there was internal division in the company between the old stylers and those who wanted to get involved in emerging products.In 1962, Warren Buffett started to buy shares in the company, believing that its then price was substantially below its intrinsic value.
By 1963, Warren Buffett and his associates were the largest stockholders and Buffett began to take a more active interest in the company. There was increasing dissension between him and Jack Stanton who had taken over the leadership of the company from his father.Buffett gradually increased his shareholding to 49 per cent and used his votes to change the management of the company. By now, the shares that Buffett had bought at an average cost of about $15 were worth $18 a share and the company had only two operative mills left. Only 2300 employees remained.
What makes this company so profitable and unique? Here are the five steps of its operations which helps it in becoming number one- Maintaining financial strength and supremacy, no matter what comes and goes. In fact, Berkshire states that they will always have at least $20 billion cash equivalent and hold its position on the top of the financial ladder so that it is never in debt. In terms of this, it has received an A++ rating. It secondly focuses on large, unusual risks, which other companies do not want to indulge themselves in. They know, thirdly how to price the risks and act rationally. National Indemnity was paid a $650 million premium to assume a net liability of $1.5 billion. That ratio of premium to liability (43%) looks roughly in line with that on the deals with Liberty Mutual, AIG, and Equitas (Lloyd’s). Most importantly, they know how to keep risks their top priority in their books. Lastly they preach discipline and continuity in their Margin of Safety.
The most renowned and biggest acquisitions of the company include Precision CastParts Corp, Burlington Northern Santa Fe, Kraft Heinz, Gen Re and Lubrizol Corporation, Duracell, Van Tyuel Group.
Berkshire has a reputation for donating huge amounts of money for social causes. Recently they gifted to Bill and Melinda Gates Foundation out of his pledge of giving 2.86 billion dollars to five charities for philanthropic causes.
Awards and Recognition
It has bagged awards like the Green Genius Top Award (2016), Top National Sales Award. Forbes recognizes it as the fourth largest company in the world and the company itself with 331,000 employees has a number of awards honoring their own staff.