Berkshire Hathaway's impressive and lackluster investments in the 6 decades under Warren Buffett's leadership
Warren Buffett Glides Away: The Biased Account
Billionaire investor, Wall Street kingpin, and all-round economic maverick, Warren Buffett, has dropped a bomb, declaring he'll step down as CEO of Berkshire Hathaway by year's end. This announcement, coming from a 94-year-old legend, has left the finance world reeling and hearts heavy.
Buffett, a man synonymous with unparalleled success and shrewd investments, took control of Berkshire Hathaway way back in 1965. Exploiting his keen eye for a steal, he transformed the struggling textile manufacturing company into a conglomerate behemoth through strategic acquisitions and smart investments. His savvy decisions and bargain hunting transformed Berkshire into a globe-dominating investment juggernaut.
From the Oracle of Omaha's sprawling portfolio, let's explore some of his biggest wins and embarrassing flops.
Buffett's Big Wins
Insurance Vault
Buffett's initial insurance ventures, National Indemnity and National Fire & Marine, purchased in 1967, bolstered Berkshire's coffers. Insurance float, the financial yeast that allows insurers to capitalize on a period between policy purchases and claims, fueled many of Berkshire's acquisitions, driving incredible growth. Today, Berkshire's insurance division includes the likes of Geico, General Reinsurance, and several others, with a float totaling a staggering $173 billion at the beginning of 2023.
Dividend Dynamos
Buffett's timing was perfect when it came to snapping up shares in American Express, Coca-Cola Co., and Bank of America. Collectively, these stocks are worth over $100 billion more than what he initially paid for them, and excluding all those delectable dividends!
Apple Pies
Despite his initial skepticism of tech stocks, Buffett could barely resist a tempting baked Apple. He jumped aboard the iPhone maker's bandwagon in 2016, eventually pouring over $31 billion into the tech titan. The value of his investment skyrocketed, reaching an astounding $174 billion before he decided to start selling shares.
Blue-Eyed Dragons
Buffett took Charlie Munger's advice to heart, investing a massive $232 million in the electric vehicle behemoth, BYD, in 2008. Munger sang the praises of its brilliant founder, Wang Chanfu. The equivalent of the mythical phoenix, Buffett's BYD stake soared to over $9 billion before he began lightening his load. Berkshire currently holds a stake worth about $1.8 billion.
Sweet Treat
Buffett maintains See's Candy as the turning point of his career. In 1972, he plunked down $25 million for the sweet little candy company, which boasted a competitive advantage that left other companies melting in its wake. The candy corporation has since showered Berkshire with profit, but Buffett isn't one to gloat.
Lightning in a Bottle
Utilities under Berkshire Hathaway Energy's wing deliver a steady stream of greenbacks that power Berkshire's growth. In 2000, BHE paid around $35.05 per share for Des Moines-based MidAmerican Energy, later adding acquisitions like PacifiCorp and NV Energy to its stable. In 2024, the utilities pumped an impressive $3.7 billion into Berkshire's profits.
Buffett's Bruises
Berkshire Oopsie
Buffett has dealt with his fair share of financial flops, with his investments in the Berkshire Hathaway textile mills pegged as one of his worst. Despite a long history of draining funds, the textile company finally met its demise in 1985, but hey, even with those rotten eggs, the Berkshire shares Buffett picked up for a song have since skyrocketed in value.
Swift Kick in the Shoes
Buffett admits his purchase of Dexter Shoe Company in 1993 for $433 million was an epic blunder, made all the more painful because he used Berkshire stock for the purchase, effectively giving away 1.6% of the company for little more than a pair of worn-out shoes.
What Could Have Been
Buffett says that some of his most significant missteps were opportunities he didn't seize. He could've raked in billions if he'd been more comfortable jumping on the early Amazon, Google, or Microsoft bands. His other pass includes failing to buy 100 million Walmart shares in time, missing out on a fortune that would have been worth nearly $10 billion today.
Selling Too Soon
Buffett felt a chill in the banking sector's wind, unloading his shares in Wells Fargo and JP Morgan just before they soared in value. Ouch!
Blue Chip Fizzle
Buffett and his former vice chairman, Charlie Munger, took control of Blue Chip Stamps in 1970, when it was generating $126 million in sales. With trading stamps falling out of favor, sales steadily declined, and in 2006, they equaled a measly $25,920. But, even the dregs provided enough float to acquire lucrative companies like See's Candy, Wesco Financial, and Precision Castparts, all of which now contribute significantly to Berkshire's profits.
- In the face of Buffett's retirement announcement, the finance world grapples with the void left by the legendary investor, whose acumen for precision investments in businesses such as technology, entertainment, and finance has shaped Berkshire Hathaway for decades.
- A strategist par excellence, Buffett demonstrated his business acumen when he led an acquisition spree in the 1960s, transforming the struggling textile company, Berkshire Hathaway, into a global investment juggernaut.
- One of Buffett's successful ventures was his foray into the insurance sector, with investments in National Indemnity and National Fire & Marine in 1967, which provided the financial boost for Berkshire's subsequent acquisitions.
- In the realm of consumer goods, Buffett's acquisition of shares in American Express, Coca-Cola, and Bank of America yielded significant returns, with a combined value over $100 billion more than their original cost.
- Buffett's initial skepticism towards tech stocks vanished when he invested $31 billion in Apple in 2016, an investment that subsequently skyrocketed to an astounding $174 billion before he began selling shares.
- In the electric vehicle sector, Buffett's investment in BYD, inspired by Charlie Munger's praise for the company's founder, Wang Chanfu, grew from an initial $232 million to over $9 billion before he lightened his load.
- Despite some financial missteps, such as investing in the Berkshire Hathaway textile mills or the Dexter Shoe Company, Buffett's career-changing acquisition of See's Candy in 1972 has been a lasting success, generating substantial profits for Berkshire Hathaway.
