Warren Buffett’s Berkshire Hathaway has grown into one of the largest companies in the world, but most people have no idea where it got its roots. Below is a brief history of how Berkshire Hathaway was created.
What is Berkshire Hathaway?
The famous Berkshire Hathaway is Warren Buffett’s company. The company is run as a conglomerate and manages a portfolio of company holdings. In addition to its stock holdings, the company owns stakes in several private companies including Heinz and Dairy Queen.
The stock trades under symbols BRK-A and BRK-B. Its BRK-A shares are known for being the most expensive stock, while BRK-B is much more reasonably priced.
Berkshire Hathaway's History
In 1888, The Hathaway Manufacturing Company was founded by China trader Horatio Hathaway as a cotton milling company. In the 1950s, The Hathaway Manufacturing Company merged with Berkshire Fine Spinning Associates Inc.
Berkshire Fine Spinning Associates was a milling company that was established in 1889 in Adams, MA. By 1917, the company was one of the largest cotton companies in the world.The combined company owned 15 plants and employed 12,000 people.
Warren Buffett began to purchase shares of the company in 1962, believing that the company’s stock price was undervalued at under $8 per share. By 1963, Buffett and his associates were the largest shareholder of the company. Eventually, Buffett used his stake to take control of the company. By 1979, the stock was worth $290 per share, lifting Buffett’s personal worth to $140 million.
Following the management change, Buffett decided to maintain textiles as the company’s core business, but also used the company as an investment vehicle. As plants began to close and the demand for textiles declined, the core business was changed to insurance services in 1967. Some of the company’s first insurance acquisitions included National Indemnity Company and National Fire & Marine Insurance Company. By 1968, the company continues to diversify by acquiring newspapers including Sun Newspaper.
Below are the unadjusted share prices for Berkshire from the time that Buffett first purchased shares in 1962.
The majority of the stocks held by Berkshire Hathaway are well known dividend stocks. While Berkshire Hathaway does not pay dividends to shareholders, a good portion of its profits are from dividend payouts.
For dividend investors that are fans of Warren Buffett’s picks, the highest yielding stocks in Berkshire Hathaway’s portfolio include Verizon (VZ ) , ConocoPhillips (COP ) and Sanofi (SNY ). Below are all of the highest yielding dividend stocks in the Berkshire Hathaway portfolio. For additional high yielding stocks, check out High Dividend Stocks By Yield.
The Bottom Line
Warren Buffett as well as Berkshire Hathaway are both highly regarded in the eyes of many investors. It is interesting to see how the company has evolved since its beginnings in the 1800s. For more information on Warren Buffett, be sure to check out The Complete History of Warren Buffett and What You Never Knew About Warren Buffett.