How Much Berkshire Hathaway Earns | Complete Case Study
Do you know the World’s Best Investor’s Company?
It’s Berkshire Hathaway, the second-largest most profitable company in the world.
Owned By the Famous philanthropist and investor, Warren Buffet who is 3rd richest person in the World.
The company started its initial business in Textile but now they owned companies of many industries like Media, Tech, Food and beverages.
The company has also invested in a very popular company Apple and Indian Company One97.
The company ranked No.1 in the United States By Revenue.
The last market capitalization of the company is $496 Billion.
So let’s read the Case Study of Berkshire Hathaway, in these, we will discuss how Berkshire Hathaway stated, how much profit they make and how much companies they have acquired.
What’s In It for me?
1. About Berkshire Hathaway
Berkshire Hathaway is an American holding company of a multitude of business. This company is run by Famous Investor Warren Buffet.
The Company owned many well famous private companies like GEICO and also has minor stakes in very big companies like apple.
The Company’s headquarters are located in Omaha, Nebraska, United States. The CEO and President of the Company are 88 years old Warren Buffet, who, still lead the company to success.
Company’s A Share is maximum trade for $304,000 On New York Stock Exchange. The company is notable for High Price Stock value.
The Company’s main business has acquired the company and managed them very well.
2. How Berkshire Hathaway
The Company Berkshire Hathaway started initially started as Textile Manufacturer Company named Valley Falls Who is established by Oliver Chase.
Oliver Chase previously worked for First Successful Textile Mile of USA. In 1929 Falls valley merged with Berkshire Manufacturing Company both known as Berkshire Fine Spinning Associates.
In 1955, the company has been merged with the Hathaway Manufacturing Company both known as Berkshire Hathaway. In 1962, The famous investor Warren Buffet starting buy the stocks of Berkshire Hathaway.
At that time the textile business was failing and not making much profit. Stanton made an oral offer to Warren Buffet to sell his share for $ 11.5 but in the written offer he mentioned the price of a share is $11.3.
Warren Buffet was angry on these situations, instead of selling his share he purchased more shares of Berkshire Hathaway. After he expands this business into insured and other investment business with the Purchase of National Indemnity Company.
In late 1970, he acquired GEICO. Buffet build up the Berkshire Hathaway as buying the stocks of undervalued companies.
Berkshire Hathaway continuously acquiring new company low profit-making company to build successful companies.
3. What Berkshire Hathaway Do
The Company has begun from Textile Manufacture companies. Thus they will be doing business in the textile industry.
The Company also operates many self-titled companies like Berkshire Hathaway Home Service of America and Berkshire Hathaway Direct Companies.
These self-titled companies do their own business. Berkshire Hathaway also provides insurance services.
The Company holding a variety of commodities and services including computer production, electronic products, providing insurance, serving food products and automotive products.
All the services and products are part of Berkshire Hathaway. The company has a multitude of business means the main company Berkshire Hathaway Acquired companies.
So far they have acquired a lot of companies under different categories. Acquiree Business has its own business. Thus the Business Model of the company is very simple.
They earned profit from the company who is owned by Berkshire Hathaway.
4. How much Profit Berkshire Hathaway Make
So far we have understood the business model of Berkshire, Now take a look at the profit of the Company.
As we know that the company owned many businesses and they have many sources of Incomes. In 2017, the company has reported net income of $44.9 Billion with revenue of $242 Billion with a hike of 8.3 % over the previous fiscal year.
In 2018, the company generates $248 Billions in revenue with a profit of $40.9 Billion. Berkshire Hathaway reports a revenue of $64.972 at the end of the quarter on 30 September 2019.
|2018||$242 B||$40.9 B|
|2017||$242137 M||$44940 M|
|2016||$223,604 M||$24074 M|
|2015||$210,943 M||$24083 M|
|2014||$194,699 M||$19872 M|
5. Digital Links
|View on LinkedIn|
|Contact Email||[email protected]|
6. Management Team
The Company’s CEO is a very famous businessman and investor who have the proven track record of making billions from investments.
Warren Buffet was born August 30, 1930, in Omaha, Nebraska, United States. Warren Buffet’s father was working as a stockbroker. Warren Buffet often visits her father’s stockbroker shop and saw the stock price. At the age of 11, Warren Buffet purchased 3 shares of Cities Services.
He sold these shares for little profit. Thus Warren has a deep interest in investment. Warren Buffet invested in many industries like Media, Insurance, Food and beverage industry.
His Investment habits made him 3rd Richest person in the world and have a net worth of $87 Billion.
CEO of Berkshire Hathaway
List: Management Team Of Berkshire Hathaway
|CEO & President||Warren Buffet|
|Director Of Communication||Kimberlee Archibald|
|Board Member||Howard Buffett|
|Board member||Donald Keough|
7. Facts & Figure
Air Transportation, Automotive, Consumer, Credit, Food Processing, Insurance, Property Insurance, Railroad, Real Estate
|Headquarters Region||The midwestern US|
|Founded Date||Jan 1, 1839|
|No. Of Employees||10001+|
|Legal Name||Berkshire Hathaway Inc.|
8. Funding & Rising
The Company has never raised any funds from Venture Capitals and Angel Investors. The Company only launch its IPO in which the company raised $3.5 M.
Companies go public from private through IPO Because in Public company its become easy to acquire new companies.
The Company launched its share on Two Categories A Category Share and B Category Share.
The A Category Share traded around $300000 per share and highest traded stock price on the New York Stock Exchange.
The Company also launched B Category share for retail investors for his trade around $200 per share. The Company’s stock is outperformed over 5 Years on the S&P 500 Index.
9. Companies Acquired
Thus the main business of the Berkshire Hathaway is Acquiring Company. Following are the list of Companies Acquired By Berkshire Hathaway
List of Top Companies Acquire By Berkshire Hathaway
|Home Services Of America||Not Disclosed|
|Medical Liability Mutual Insurance Co.||Not Disclosed|
|Precision Castparts||$37.2 B|
|Detlev Louis Motorradvertribs||$450 M|
|Charter Brokerage||Not Disclosed|
|Van Tuyl Group||Not Disclosed|
|WPLG Local 10||Not Disclosed|
|Oriental Trading Company||Not Disclosed|
|Omaha World-Herald||Not Disclosed|
|McLane Company Inc||Not Disclosed|
|Burlington Northern Santa Fe LLC||Not Disclosed|
|Berkshire Hathaway Reinsurance Group||Not Disclosed|
|Lubrizol Corporation||Not Mentioned|
10. Investments of Berkshire Hathaway
So war we have read about the Companies acquired by Berkshire Hathaway. The company has also made many investments in Very Big Companies for taking a minor stake. The list of companies are following in which Berkshire has made investments
|Organization Name||Funding Round||Investment|
|RH||Post-IPO Equity||$200 M|
|One97||Funding Round- One97||$300 M|
|Teva Pharmaceutical Industries||Post-IPO Equity||$358 M|
|Pilot Flying J||Funding Round – Pilot Flying J||–|
|STORE Capital||Post-IPO Equity||$377 M|
|Home Capital Group||Post-IPO Debt||–|
|Apple||Post-IPO Equity||$1 B|
|Tetrapod Software||Funding Round- Tetrapod Software||$2.4 M|
11. Future Plan
As we have discussed the very big investment and acquisitions by Berkshire Hathway.
Berkshire Hathaway plans to acquire more companies and invest in more startups. Berkshire Hathaway has never paid a dividend to its stakeholders and all the Profits of the company will be reinvested in buying more stocks.
The company are looking for more tech companies to invest in.
Berkshire Hathaway stock is expensive because Warren Buffet has never announced a stock split which will increase no. of shares in the market and reduce its price. He has never done this because it will take a lot of legal work and he has to pay fees and taxes which he considers a waste of money.
Recently Warren Buffet sold all his airline stocks in loss because he didn’t find any sustainable competitive advantage in these companies. So he didn’t find the future of these companies very bright.
Berkshire Hathaway doesn’t pay dividends because Warren Buffett considers that he always has an opportunity to invest in the market which will generate him and investors better profit.
Berkshire Hathaway introduced class B share so that even retail investors can directly invest in this company.
Earlier retail investors found it difficult in investing in this company because of the high price of Berkshire Hataway class A share. So they invest only through mutual funds.
We can track Berkshire Hathaway portfolio by reading their annual reports and letters. We can also attend or watch their annual meetings.
You can also bid for having lunch with Warren Buffett with your 7 friends. Its price is very high
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