The Back Story
Although Berkshire Hathaway is today associated with Warren Buffett and his long-time partner Charlie Munger, the origins of the company actually stem from 1839.
The original company was a textile mill in Rhode Island, and by 1948 Berkshire employed 11,000 people and brought in $29.5 million in revenue (about $300 million in today’s dollars).
After Berkshire’s stock began to decline in the late 1950s, Buffett saw value in the company and started accumulating shares. By 1964, Buffett wanted out, and the company’s CEO Seabury Stanton offered to buy Buffett’s shares for $11.37, which was $0.13 less than he had previously promised Warren he would buy them for. Buffett didn't take kindly to the previously promised deal, and instead of taking the offer, and selling his shares back, he opted to buy more shares. Eventually he took control of the company and fired Stanton.
The company was his, and the rest is history...
In the long-running contest of Warren Buffett vs. the stock market, the scoreboard isn’t even close:
Berkshire Hathaway (1964-2017) 2,404,748%
S&P 500 15,508%
Compound annualized gain
Berkshire Hathaway (1964-2017) 20.9%
S&P 500 9.9%
Source: BH Annual Report. BH’s market value is after-tax, and S&P 500 is pre-tax, including dividends.
Paul R. Rossi, CFA