25 Surprising Facts About Berkshire Hathaway
May 2nd 2013 11:29PM
Updated May 3rd 2013 1:05AM
1. Since Warren Buffett took the helm in 1964, Berkshire Hathaway has never underperformed the S&P 500 over any five-year interval.
2. If you had taken $10,000 back then and achieved the same rate of return as Berkshire's growth in per share book value, at the end of 2012, you would have had $58,681,700.
3. Under Buffett, Berkshire shareholders have collected just one dividend: a $0.10 per share payout in 1967. Buffett jokes he "must have been in the bathroom when that decision was made."
4. Berkshire's roots go back more than 174 years to the founding of textile manufacturer Valley Falls Company, which itself merged with Berkshire Cotton Manufacturing Company in 1929. The resulting company merged with Hathaway Manufacturing to create Berkshire Hathaway in 1955.
5. In 2010, Warren Buffett said he considered Berkshire the "dumbest" stock he ever bought. Why? Because in 1962 he acquired his controlling stake in anger when one of its managers short-changed him in a tender offer to the tune of $0.125 per share. After he fired the manager, Buffett realized he had committed too much of his money to a "terrible" textiles business, which he fought to save for 20 years before giving up. By Buffett's estimation, that mistake cost him more $200 billion in compounded returns.
6. In 1981, just 12 people attended Berkshire's annual shareholder meeting. This year, an estimated 35,000 shareholders are expected to make the trip to Omaha.
7. Over the course of just nine hours at last year's annual meeting, Berkshire shareholders bought 1,090 pairs of Justin Boots, 10,010 pounds of See's candy, 12,879 Quikut knives, and 5,784 pairs of Wells Lamont gloves. No wonder Buffett joked a few months ago, "Anyone who says money can't buy happiness simply hasn't shopped at our meeting."
8. At the end of 2012, Berkshire employed 288,462 people.
9. Only 24 of those employees work at Berkshire's headquarters office -- a testament to Buffett's decentralized management structure, which entrusts business unit leaders to make the best possible decisions with minimal bureaucracy.
10. Not including its equity holdings and recently acquired 50% stake in Heinz , Berkshire is made up of 56 distinct subsidiary businesses.
11. That doesn't include the 26 smaller companies on which Berkshire quietly spent $2.3 billion last year as "bolt-on" acquisitions to be melded into its existing operations.
12. In keeping with his principles on maintaining an adequate margin of safety, Buffett insists on keeping at least $20 billion in cash on Berkshire's balance sheet at any given time.
13. Berkshire's insurance operations have registered an underwriting profit for the past ten consecutive years, good for a total pre-tax gain of $18.6 billion -- and an incredible feat in the insurance industry. For some context, consider rival insurer State Farm (a well-managed company in its own right) has operated at an underwriting loss for nine of the last 12 years.
14. GEICO's Gecko got a mention in Buffett's latest shareholder letter in praise for the company's outstanding performance. "Neither rain nor storm nor gloom of night can stop him," Buffett wrote, "the little lizard just soldiers on, telling Americans how they can save big money going to GEICO.com."
Still, I think the night vision antelopes deserve at least some credit:
15. Berkshire's MidAmerican Energy unit currently accounts for 6% of the United States' total wind generation capacity.
16. When MidAmerican completes its three solar projects currently under construction, it will own around 14% of total U.S. solar-generation capacity.
17. Construction began just a few days ago on one of those projects, the 579 Megawatt Antelope Valley Solar joint venture with SunPower Corporation . When all is said and done, it will have provided 650 jobs and more than $500 million in regional economic impact over the course of its three-year construction period, and should provide enough energy to power around 400,000 average California homes.
18. Berkshire's currently carries about 15% of all inter-city freight in the U.S. through its Burlington Northern Santa Fe subsidiary. That calculation includes all goods transported by truck, rail, water, air, or pipeline.
19. Even better, BNSF is able to carry each ton of freight about 500 miles on a single gallon of diesel fuel, which is around four times more efficient than the trucking industry.
20. Buffett is rapidly increasing the equity portfolio responsibilities of 42 year-old Todd Combs and 50 year-old Ted Weschler, both of whom have worked for Berkshire for less than three years. By the end of 2012, both Combs and Weschler had each outperformed the S&P 500 by double-digit margins, and collectively managed nearly $10 billion of Berkshire's money.
21. Weschler, a former managing partner of the Peninsula Capital Advisors hedge fund, won the job after placing the winning bid in both 2010 and 2011 for Buffett's annual charity auction to the benefit of San Francisco's Glide foundation. Though he remained anonymous until after his hiring was announced, Weschler paid more than $2.6 million each year to have lunch with Buffett.
22. While Buffett owns 13.7% of American Express through Berkshire, he says the best advice he can offer young people is to avoid credit cards. Why? In his words: "If I borrowed money at 18 or 20 percent, I'd be broke."
23. Berkshire lost nearly $1.4 billion in a single day last month when its 6% stake in IBM plummeted 10% following the tech giant's first-quarter earnings report. Even so, shares of IBM still sit well above Berkshire's cost basis as of the end of 2012, near $171 per share. Considering Buffett stated earlier this year Berkshire's ownership interest in IBM was likely to increase in the future, don't be surprised if Buffett used the drop as an opportunity to add to his position.
24. In times of financial duress, Berkshire is more than happy to lend a hand to other struggling companies, including loans of $3 billion and $5 billion to Swiss Re and Bank of America, as well as loans to Goldman Sachs and General Electric in 2008 of $5 billion and $3 billion, respectively. Of course, each of those loans made Buffett a bundle of money, with the Goldman Sachs deal most recently culminating in Berkshire becoming one of Goldman's top 10 shareholders for next to nothing.
25. Buffett holds more than 98 percent of his $53.5 billion net worth in Berkshire Hathaway stock, and plans to gradually give nearly all of it to the Bill and Melinda Gates Foundation before he dies. Through the Giving Pledge he and Mrs. Gates formed in June, 2010, they have so far convinced over 100 more of the world's wealthiest individuals and families to follow suit, giving at least half their wealth to philanthropy or charitable causes either during their lifetime or after their death.
Heading to Omaha
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The article 25 Surprising Facts About Berkshire Hathaway originally appeared on Fool.com.Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool recommends American Express, Berkshire Hathaway, Goldman Sachs, and H.J. Heinz Company. The Motley Fool owns shares of Bank of America, Berkshire Hathaway, General Electric Company, and International Business Machines. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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