Berkshire Hathaway: The Company That Warren Buffett Built

Berkshire Hathaway is known in the financial and investment circles as the company that Warren Buffett built. When this company was originally founded in 1839, Warren Buffett would not be born for almost a century. In 1839, the Valley Falls Company entered a merger with Berkshire Cotton Manufacturing Company in 1929. The resulting company was called Berkshire Fine Spinning Associates. In 1955, another merger, this time with Hathaway Manufacturing Company, resulted in a new entity named Berkshire Hathaway, which was in the textile business. Initially there were 15 different plants in operation and over $120 million generated in revenue. These plants employed more than 12,000 people. Eventually some of the plants were closed and many employees lost jobs.

Any time Berkshire Hathaway closed down a plant the stock movement on the market was consistent. This was noticed by Warren Buffett in 1962, and he started to buy shares in the company. Over time, Warren realized that the textile industry in America was dying, and Berkshire Hathaway was in a tenuous financial position. A verbal offer to Buffett for his shares in the company was made in 1964, and the offer was made for a share price of $11 and 1/2. The offer was accepted but when the tender offer arrived, the price per share was listed at $11 and 3/8 instead. This was viewed as an insult by Warren Buffett, and he became angry. The tender offer was refused and instead of selling the shares he owned he snapped up more shares instead.

When Warren Buffett started buying up additional shares in Berkshire Hathaway the goal was to become the largest stockholder of the company so that he could take control. When this happened Warren fired the executive who had undercut him on the deal. By 1967 Buffett could no longer maintain the core textile interests of the business because the industry had greatly declined. Berkshire Hathaway underwent an expansion into other areas. Insurance investments and other options outside of the textile industry turned the company around, and by 1996, GEICO became a wholly owned subsidiary of Berkshire Hathaway. The last textile operations for the company were stopped in 1985, and today insurance and financial sectors make up a big part of the company holdings.

The company that started out as a small textile operation is now a multinational holding company with a number of subsidiaries. The wide range of diversity in the businesses owned by Berkshire Hathaway is astonishing. A number of regional utility companies in the gas and electric sectors have been acquired, and there are also holdings that include retail, confections, jewelry, vacuums,uniforms, journalism, and much more. Thanks to the investing genius of Warren Buffett, what was once a small company is now a conglomerate with a global reach. The company headquarters are based in Omaha, Nebraska, the hometown of Warren Buffett. He is still the CEO and largest shareholder of Berkshire Hathaway today. In 2012 the company ranked #15 on Forbes Global 2000 list, making it the 15th largest company in value in the world.

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