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Why Invest in Berkshire Hathaway

Apr 03 2019

Warren Buffett

One of the biggest names in the financial world is Berkshire Hathaway. They own huge well established companies such as American Express, Apple, Burlington Northern Santa Fe and GEICO. They also share in several other well-know companies such as the Coca-cola company, Bank of America and Wells Fargo. Berkshire Hathaway was started in the 1830s as a textile manufacturing company. This mill grew into one of the most successful of all time. It wasn’t until the 1950’s that the Hathaway Manufacturing company merged with Hathaway to become Berkshire Hathaway.

Warren Buffett

In our modern world, the company is a multi-million dollar asset under the control and leadership of Warren Buffett, who is the chairman and chief executive of the company which focuses on long term investment strategies and diversifying business interests. Today, Berkshire Hathaway is one of the top players in the financial world and active partner in main international deals and agreements. According to the Forbes Global 2000 list, Berkshire Hathaway is the third largest company in the world. Their class A shares are currently selling for over $300,000.00 and are worth every penny. The number of big name companies that are connected with Berkshire Hathaway’s stock is the reason they are priced so highly. These businesses are tops in the world and will not look to disappear any time soon. Apple is one of the companies and they have such a firm grasp of the technology sector that they won’t be leaving the business world for quite sometime. The same can be said for the number of insurance companies who are doing better than ever with the rise of the pharmaceuticals industry worldwide.

Berkshire History of Cash Reserves

What really makes the Berkshire Hathaway stock worth so much is Warren Buffett. He took the old textile company and made it into one the most stable and investable business ever. He mandates the firm keep a minimum of $20 billion dollars easily at hand, though lately that number has been more than $100 billion. That makes this company a highly investable asset. This is a company that is actively investing in strong stable companies and has no debt to speak of in regards to them. To be bought by Berkshire Hathaway means that, that company is also a strong stable entity. Companies all over the world want to be acquired by Berkshire Hathaway because it will mean their business will grow beyond their wildest dreams and become one of the more sought after companies in the world.

The reason Berkshire Hathaway become such as large and successful company is its ability to be patient. They hold on to companies for not just years, but decades. They give these companies time to grow on their own and show what they are worth. Just imagine what the world would be like if they did not have such large hold of the company known as apple. Apple is a company that would not have gone far without its amazing leadership, but also without Berkshire Hathaway standing behind them even when they were at their weakest. They are one of the biggest companies in the technology sector now. It can pay off big to be patient.

Because of the large amount of investable income that Berkshire Hathaway requires its company to maintain, it means that should another economic downturn happen, as with the 2008 recession, they will have no trouble weathering the shift and neither will your portfolio. They will also have the buying power readily available to buy up any struggling yet salvageable companies. That is how Bank of America joined the Berkshire Hathaway stock portfolio. They were bought during the financial downturn in 2008.

When Warren Buffet Dies

The company does have its own set of risks for future investors. The biggest one is when Warren Buffett dies. At 89, the icon is still going strong, but there will be shifts once he does die. The other shift and possible problem for investors are his chose successors, Ted Weschler, and Todd Combs. Both men are extremely talented and know their business as well as Mr. Buffett, but as with any dynasty ending, there will be bumps until the two, who already control much of the company, full shoulder the enormous burden or running one of the most power full companies ever. They both have outstanding records and have both proven their worth over time, but whichever one takes over as the head man will have very big shoes to fill.

What the United States economy and the world economy will do will also have an impact on how this company will run in the future. There are certain liquidity requirements that United States companies need to meet for regulations by the government. This unique company could be required to submit to oversight by the Federal Reserve. It would mean additional capital restrictions and regulations. Those requirements may make future growth difficult and the profitability of the company more restricted. These are just some of the issues this asset is facing in the future.

Class B Shares

What will keep Berkshire a strong company into the future will be the insurance sector. Many of its assets are coming from its own financial activities. Though affording the A shares are out of reach for most mortals, the rest of us are also to add their Tesla and Netflix. Neither of those two companies is looking to shrink in the future. In fact, they are projected to grow with the changes in the entertainment markets and the rise in all electric cars. Those B shares are more affordable and the company futures look just as bright. Also, a lot of the Berkshire Hathaway A shares were not incredible companies when they were just beginning either. Tesla and Netflix may be young, but they have just as much of a chance of making it to the A shares as other companies. Only time and patience will tell.

Why Invest in Berkshire Hathaway

Why should you invest in Berkshire Hathaway? Their future stability and the number of companies that they select as future assets is why. They have the right eye for seeing the future potential of the little guys just starting out. With years of experience behind them and a large financial cushion to fall back on, they are a company to watch and invest your money in. They are projected to have a good future. They are carrying many companies that are already huge assets to this country as well as a stock portfolio. They are to be watched because the companies they choose to become winners.

Berkshire Hathaway VP Charlie Munger on investing

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