World’s costliest share – Berkshire Hathaway

10/07/2018

World’s costliest share – Berkshire Hathaway

Berkshire Hathaway is owned by the most renowned equity investor, Warren Buffet. A very interesting fact about the company is that it is the costliest share in the world. Yes, 1 share of Berkshire Hathaway is worth 329,500 USD (or 2.44 crores INR). The reason that it is so costly is that it has never undergone a stock split. This makes it almost impossible for retail investors to buy this stock. And hence, it is majorly owned by the institutions and serious investors. Berkshire is currently the seventh largest company in the US by market capitalization.

                                                 1 share of Berkshire Hathaway = 2,44,04,603 INR 

Warren Buffet’s Investment arm

Berkshire is a holding company which means that it buys stakes in different companies. The company wholly owns GEICO, Dairy Queen, BNSF Railway, Lubrizol, Fruit of the Loom, Helzberg Diamonds, Long and Foster, Flight Safety International, Pampered Chef and NetJets. It has significant minority holdings in companies like AMEX, Apple, Bank of America, Bank of New York Mellon, BYD Company, Coca Cola, Delta Airlines, Southwest Airlines, General Motors, Wells Fargo, US Bancorp, Phillips 66 and Moody’s Corporation. Interesting thing to notice is that most of the holding companies are consumer focused companies

Berkshire Hathaway Portfolio

Berkshire Hathaway Holdings

                Berkshire Hathaway minority Holdings (excluding subsidiaries) from Annual Report – 2017

Brief History

It is a lesser known fact that Berkshire Hathaway was started as a Textile Manufacturing company in 1839. In 1962, the company was going through a bad phase with many of its mills being closed. That was when Buffet started investing in the company. But later, he realized that the company was not doing well and decided to sell the shares to the owner of the company. The price was decided to be 11.5 $ per share. But, the owner of the company later reduced the price to 11.375 $ per share. This made Buffet angry and he decided to buy more stake in the company to overtake it which he eventually did. This left him as the majority investor in a failing textile business.

Buffet maintained the company’s core business of textiles. But later started investing money from his partnerships through Berkshire in different companies. He first invested in the insurance business by buying stakes in National Indemnity Company and GEICO. Post that, he kept investing in different companies. The textile business was shut down in 1985. And as they the rest is history !! Interestingly, in 2010, Buffett claimed that purchasing Berkshire Hathaway was the biggest investment mistake he had ever made, and claimed that it had denied him compounded investment returns of about $200 billion over the subsequent 45 years.

An important lesson

People love to find ways to make quick money in stock markets. They are looking to double or triple their money in no time. But, it takes time to create real wealth. Berkshire Hathaway has increased Buffet’s and the investors money at 19.2% CAGR over the years. They didn’t double the money overnight but the power of compounding yielded excellent results for Berkshire and Buffet. Over 99% of Warren Buffet’s wealth was created after he was 50 years old. Hence, an equity investor should set realistic goals when investing in stocks. If you want to double your money overnight, it would be better to try a race course or a casino rather than stock markets. 

Warren Buffet Networth

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Disclaimer: I am not a SEBI registered analyst and not advising anyone to buy. The purpose of this article is to share my viewpoint about fundamentals and the future prospects of the company. So, please do not consider this as an investment tip. Talk to your financial advisor before taking any investing call.

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