Hey there! Are you ready to dive into the fascinating history of one of the world's most iconic and expensive stocks? Let's take a journey back in time to uncover the story of Berkshire Hathaway's stock and the legendary investor who built it into the powerhouse it is today. You'll be surprised to learn how it all began.
Step 1: The Beginning - Before Buffett
To understand Berkshire Hathaway's stock journey, we need to go back before the "Oracle of Omaha" himself, Warren Buffett, took the reins. The company was originally a textile manufacturing firm. By the early 1960s, the textile industry was struggling. Buffett saw an opportunity, not in the textile business itself, but in the company's undervalued stock.
A Stock Under $20: In the early 1960s, Berkshire Hathaway's stock was trading for less than $20 a share.
The Tender Offer: Warren Buffett began buying shares in 1962, and by 1964, he and his partners had a significant stake. A dispute with the company's management over a tender offer led to Buffett taking control. He famously offered to sell his shares back to the company for $11.50, but the company's written offer came back at $11.375. Feeling slighted, Buffett decided to buy more shares and take over the company.
Step 2: Warren Buffett Takes Control
In 1965, Warren Buffett gained control of Berkshire Hathaway. This is the pivotal moment that set the stage for its incredible growth.
The Price in 1965: When Buffett took over, the stock was valued at around $19 per share.
A New Direction: Buffett didn't want to be in the textile business. He began using the company's cash flow to acquire and invest in other businesses. This marked the beginning of Berkshire Hathaway's transformation from a struggling textile mill into a diverse conglomerate.
Step 3: The Ascent to Insane Heights
The story of Berkshire Hathaway's stock is not about a single "IPO" in the traditional sense, but a continuous journey of compounding value. The company's Class A shares (BRK.A) have never had a stock split, which is a key reason for their astronomical price.
Growth Trajectory:
Shares first broke the $100 mark in 1977.
They crossed $1,000 in 1983.
The $10,000 mark was reached in 1992.
It surpassed $100,000 in 2006.
Today, the stock trades for hundreds of thousands of dollars per share, making it the most expensive stock in the world.
Step 4: The Introduction of Class B Shares
The high price of the Class A shares made it inaccessible to most individual investors. To address this and prevent the creation of "copycat" investment trusts, Berkshire Hathaway introduced Class B shares (BRK.B) in 1996.
The price of Class B shares was initially set at 1/30th of the price of the Class A shares, and it came with fewer voting rights.
In 2010, the company did a 50-for-1 split of the Class B stock, further reducing its price and making it even more affordable for the average investor.
Step 5: The "First Came Out" Misconception
Many people ask "how much was Berkshire Hathaway stock when it first came out," assuming it had a traditional initial public offering (IPO) in recent history. The key is that the company was already public when Buffett took it over. The "first came out" moment for the modern Berkshire Hathaway is arguably when Buffett took control in 1965 at around $19 per share, not a brand-new IPO.
Final Thought: The journey of Berkshire Hathaway's stock is a testament to the power of long-term value investing, disciplined capital allocation, and the incredible mind of Warren Buffett. It's a reminder that sometimes the best investments are the ones that have a long history of growth, not just a flashy IPO.
10 Related FAQ Subheadings
How to buy Berkshire Hathaway stock?
You can buy Berkshire Hathaway stock (BRK.A or BRK.B) through a brokerage account. BRK.B is the more accessible option for most retail investors due to its significantly lower price.
How to find the historical price of Berkshire Hathaway stock?
You can find historical stock prices on financial websites like Yahoo Finance, Google Finance, or TradingView. These platforms provide charts and data for both Class A (BRK.A) and Class B (BRK.B) shares.
How to calculate the return on a Berkshire Hathaway investment?
To calculate the return, you can compare the price at which you bought the shares to the current price. For example, if you bought a Class A share in 1965 at $19 and it's now over $700,000, your return is over 3,684,000%.
How to understand the difference between BRK.A and BRK.B?
BRK.A (Class A) shares have a much higher price and have never split. They come with full voting rights. BRK.B (Class B) shares are much cheaper and have limited voting rights, making them more accessible to small investors.
How to invest in Berkshire Hathaway without buying a full share?
You can buy fractional shares of Berkshire Hathaway Class B stock through brokerages that offer this feature. This allows you to invest a specific dollar amount, even if it's not enough to buy a full share.
How to get the Berkshire Hathaway annual report?
The annual report, famously featuring Warren Buffett's letter to shareholders, is available for free on Berkshire Hathaway's official website. It's a must-read for any investor.
How to attend the Berkshire Hathaway annual meeting?
You can attend the annual meeting in Omaha, Nebraska, by owning at least one share of Berkshire Hathaway stock (either Class A or Class B).
How to explain why Berkshire Hathaway stock is so expensive?
The Class A stock's high price is a direct result of Warren Buffett's decision to never split the shares. This has allowed the stock's value to compound over decades, reflecting the company's phenomenal growth.
How to find out if Berkshire Hathaway pays dividends?
Berkshire Hathaway famously does not pay a dividend. Warren Buffett believes that reinvesting the company's earnings back into the business provides a better return for shareholders than paying out a dividend.
How to compare Berkshire Hathaway's performance to the S&P 500?
Berkshire Hathaway's compounded annual growth rate from 1965 to 2023 was 19.8%, significantly outperforming the S&P 500's 10.2% CAGR over the same period.