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The best-performing holding company of all time
Berkshire Hathaway is a holding company based in Omaha, Nebraska. It was founded in 1965 by the most iconic investor of all time, Warren Buffett. Berkshire Hathaway is mostly known for its long-term-oriented investment approach, with prominent focus on businesses with strong competitive advantages, led by honest people and great capital allocators. Some of the company's best investments have been Geico, American Express, Washington Post, Coca-Cola, and Apple.
Background and history
Warren Buffet, the founder
Warren Buffett was born a little less than a year after Black Tuesday, on the 30th of August, 1930. He was extraordinarily mathematical and analytical as a child and counted everything that could be counted. He also loved collecting things – as you might have guessed, money above all.
Warren's father, Howard Buffett, operated his own stock brokerage firm in Omaha when Warren was little, and the office was, appropriately enough for Warren, filled with finance and investment books. By age ten, Warren had read every book in the library and thereby found the love of his life, compound interest, and investments.
After studying finance at Wharton and working a couple of years at the legendary hedge fund Graham-Newman in New York, Warren moved back to Omaha to start his own company, Buffett Partnership Ltd, which was the predecessor to Berkshire Hathaway. Warren began investing capital for friends, family, and neighbors through the partnership, which he continued doing for almost ten years with astonishing overperformance against the indices. In 1965, Warren liquidated the partnership and instead began to manage capital through one of the subsidiaries, Berkshire Hathaway, which at the time was a textile company but which was now transformed into a holding company. Today, roughly 60 years later, Berkshire Hathaway is the best-performing holding company of all time and one of the largest companies in the world.
By investing in companies with strong competitive advantages, led by honest people and great capital allocators, and by focusing on long-term business performance rather than short-term stock price movements – Berkshire Hathaway has achieved remarkable returns since its inception. Between 1965 and 2021, Berkshire Hathaway's market value rose 3,641,613%, which corresponds to a compound annual growth rate (CAGR) of 20.1% for 56 years. During the same time, the S&P 500 rose 30,209%, corresponding to a CAGR of 10.5%.