The Longevity of a Giant: How Long Has Berkshire Hathaway Been in Business?
Have you ever wondered about the true age of a company like Berkshire Hathaway? It's a name synonymous with Warren Buffett, and it's easy to assume its history begins with him. But what if I told you that the company's roots stretch back far beyond the "Oracle of Omaha"? Get ready to be surprised, because the story of Berkshire Hathaway is a fascinating journey through time, from the steam-powered mills of the 19th century to the global conglomerate it is today.
Let's dive in and explore the incredible timeline of this business behemoth.
Step 1: The Textile Origins - A Tale of Two Mills
To understand how long Berkshire Hathaway has been in business, you need to go back to its very beginning, a time when its business had nothing to do with insurance, railroads, or candy. The story starts with two separate textile manufacturing companies in Massachusetts:
Hathaway Manufacturing Company: Founded in 1888 in New Bedford, Massachusetts, by Horatio Hathaway, a prominent China trader.
Berkshire Fine Spinning Associates: Formed in 1929 through a merger of several textile mills, with roots dating back even further to the Valley Falls Company, which was founded by Oliver Chace in 1839.
So, when we talk about the founding of Berkshire Hathaway, the earliest thread of its corporate lineage can be traced back to 1839. That's a staggering 186 years ago!
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Engage with me: Can you imagine a world without electricity, cars, or even widespread telephones? That's the world in which the foundation of this company was laid. What do you think was the biggest challenge for a business starting back then? Share your thoughts!
Step 2: The Merger and the Decline of Textiles (1955 - 1965)
In 1955, the two companies, Hathaway Manufacturing and Berkshire Fine Spinning Associates, merged to form Berkshire Hathaway Inc. This new entity was a sizable textile manufacturer with 15 plants and over 12,000 employees. However, the textile industry in New England was already in decline due to competition from cheaper labor and newer mills in the South.
A Struggling Business: The company was struggling, and its financial performance was inconsistent. While sales were high, profit margins were thin.
A Misguided Investment: Enter Warren Buffett. In 1962, Buffett, through his investment partnership, began buying stock in Berkshire Hathaway. He saw the company's stock trading at a low price and believed he could make a profit by selling his shares back to the company when it liquidated some of its mills.
This was a time of transition and struggle for the company, as its traditional business model was no longer sustainable.
Step 3: The Buffett Takeover and Transformation (1965 onwards)
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This is the pivotal moment in Berkshire Hathaway's history, the one that everyone knows. In 1964, a disagreement over the price of his shares with the company's management so irritated Buffett that he decided to do something completely different. Instead of selling, he aggressively bought more shares, gaining majority control of the company in 1965.
A New Direction: Buffett initially continued the textile business but quickly realized it was a dying industry. He famously called the purchase of the textile business his "worst trade."
The Shift to a Conglomerate: In 1967, Buffett made his first acquisition for Berkshire Hathaway: National Indemnity Company, an insurance company. This was the turning point. Buffett recognized the power of the insurance business, which generates cash (premiums) that can be invested. He used this "float" to acquire other companies and build a diversified portfolio.
The Empire Grows: Over the following decades, Berkshire Hathaway transformed from a failing textile mill into a massive, multinational conglomerate. The textile operations were finally closed down in 1985. The company went on to acquire a vast array of businesses, from insurance companies like GEICO to consumer brands like Dairy Queen and Fruit of the Loom, and major players in energy and transportation like BNSF Railway.
Step 4: Berkshire Hathaway Today - A Legacy of Value Investing
Today, Berkshire Hathaway is not just a company; it's a financial powerhouse and a testament to the power of long-term value investing.
A Holding Company: It functions as a holding company, owning dozens of businesses outright and holding significant stakes in public companies like Apple, Coca-Cola, and American Express.
Unwavering Philosophy: The company's success is a direct result of Warren Buffett's and his long-time partner Charlie Munger's (who passed away in 2023) investment philosophy: buying wonderful businesses at a fair price and holding them for the long term.
So, while the company as we know it today, with its diverse holdings, has been shaped by Warren Buffett since 1965, its official corporate history extends back to 1955. And the thread of its lineage, the foundation of one of its founding companies, dates all the way back to 1839.
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10 FAQs: How to...
Here are some quick answers to frequently asked questions about Berkshire Hathaway's history and operations:
How to find the official founding year of Berkshire Hathaway? The company was officially formed in 1955 through the merger of two textile companies, but its roots can be traced to 1839 with one of its predecessor companies.
How to get a job at Berkshire Hathaway? Berkshire Hathaway's corporate office is famously small. Most employment opportunities are found within its numerous subsidiary companies.
How to buy a share of Berkshire Hathaway stock? You can buy shares of Berkshire Hathaway's Class A (BRK.A) and Class B (BRK.B) stock through a brokerage account. The Class A shares are known for being extremely expensive, while the Class B shares are much more affordable.
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How to attend the Berkshire Hathaway annual meeting? The annual shareholder meeting is a massive event held in Omaha, Nebraska, and is often called "Woodstock for Capitalists." To attend, you must be a shareholder and present proof of ownership.
How to understand Berkshire Hathaway's business model? Its model is simple: it uses the cash generated from its wholly-owned businesses, particularly its insurance operations, to acquire other companies and make long-term investments.
How to become a subsidiary of Berkshire Hathaway? Warren Buffett looks for companies with strong competitive advantages, a history of consistent earnings, and excellent management that he can trust to run the business independently.
How to learn about Berkshire Hathaway's portfolio? The company's annual reports and quarterly filings with the SEC provide a detailed list of its holdings and financial performance.
How to pronounce "Hathaway"? It's pronounced "Hath-uh-way."
How to know which companies Berkshire Hathaway owns? The company's website lists its major subsidiaries, which span a wide range of industries, including insurance, manufacturing, retail, and more.
How to follow Warren Buffett's investment philosophy? Start by reading his annual letters to shareholders and studying his principles of value investing, which emphasize buying businesses, not stocks, and holding them for the long term.
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