Berkshire Hathaway Growth Driven By Buyout and Business Mix

The Berkshire Hathaway conglomerate consists of nearly 90 subsidiaries and has businesses that range from ice cream to insurance to locomotives.

Although the company runs many different types of businesses, its causality and property insurance business is its main source of income. This overall segment has provided a huge moat for Berkshire Hathaway, making the many acquisitions that the company has enjoyed over the past several years possible.

Some of the economically sensitive noninsurance businesses at Berkshire Hathaway, including manufacturing, retail, service, utilities and energy, are performing quite well and are looking to do so continuously as the economy improves. In particular, Berkshire Hathaway is seeing exponential growth in the energy and utilities sectors led by additional revenue from Burlington Northern Santa Fe railroad, which they acquired back in February 2010.

The finance and financial products segment of Berkshire Hathaway have nicely handled the challenges that came their way due to a soft housing market in the recent past. We expect that trends will improve in this segment since the housing market is rebounding and finally catching up.

With Warren Buffett at the helm of this company, Berkshire Hathaway has created great value for its shareholders over the last few years. With a strong capital position and the unique skills that Warren Buffett possesses, he has made Berkshire Hathaway a huge conglomerate that has an equity stake in many large companies and owns close to 90 subsidiaries.

With so much cash at its disposal, the company is currently contracted for 31 additional bolt on acquisitions that will likely cost in the neighborhood of $7.8 billion. The transactions themselves are in the range of $400,000 to $2.9 billion. During the first quarter of 2015, Berkshire Hathaway purchased controlling interest in Van Tuyl Group. The big acquisitions certainly provide unique business opportunities for Berkshire Hathaway, but the bolt on acquisitions help to improve earnings of the existing businesses.

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