Berkshire Hathaway started as a failing textile mill and became the most studied investment vehicle in history. The story of Warren Buffett, Charlie Munger, and the compounding machine they built.
Educational content only — not personalized financial, legal, or tax advice.
Berkshire Hathaway began as a struggling New England textile manufacturer. Warren Buffett first bought shares in 1962, recognizing it was trading below its liquidation value. By 1965 he had accumulated control. The textile business never recovered — it was finally shut down in 1985 — but the cash flows it generated in the interim were invested into insurance companies, and those insurance companies became the foundation of the most successful holding company in history.
The strategic insight that Buffett recognized in insurance was not the underwriting business itself — it was the float. Insurance companies collect premiums before they pay claims, creating a pool of money (the float) that can be invested in the interim. If premiums exceed claims over time (underwriting profit), the float is essentially free leverage. Berkshire's insurance subsidiaries — GEICO, Berkshire Hathaway Reinsurance, and General Re — generate tens of billions in float annually. That float, invested by Buffett and his late partner Charlie Munger, is the engine of Berkshire's wealth creation. As of 2024, Berkshire's insurance float exceeds $160 billion.
Charlie Munger joined Buffett as Vice Chairman in 1978 and remained until his death in November 2023 at age 99. Their partnership transformed Berkshire's investment approach. Buffett, trained by Benjamin Graham in pure value investing — buying statistically cheap businesses regardless of quality — was influenced by Munger's insight that it was better to pay a fair price for a wonderful business than a wonderful price for a fair business.
The shift in philosophy is visible in the portfolio: early Berkshire investments were deep-value cigar butts (one last puff of value before discarding). Later investments — Coca-Cola (1988), American Express, Wells Fargo, Apple — were high-quality businesses with durable competitive advantages (moats) purchased at reasonable valuations. The concept of the economic moat — a sustainable competitive advantage that protects a business from competition — is Berkshire's central investment framework and has influenced how the entire investment industry thinks about business quality.
Berkshire is not merely an investment portfolio. Its wholly owned operating businesses employ over 380,000 people and generate revenues exceeding $300 billion annually. The major operating subsidiaries include:
BNSF Railway (acquired 2010 for $44 billion): One of the two largest U.S. freight railroads, moving coal, grain, consumer products, and industrial materials across 32,500 route miles. A capital-intensive business with natural monopoly characteristics in its corridors.
Berkshire Hathaway Energy: Electric utilities, natural gas pipelines, and renewable energy in the U.S., UK, and Alberta. Operates under regulatory frameworks that provide stable, predictable returns.
Manufacturing, Service, and Retailing: Includes Precision Castparts (aerospace components), Marmon (industrial components), McLane (food distribution), See's Candies, Dairy Queen, and dozens of other businesses.
Berkshire began buying Apple in 2016, a late entry that Buffett has described as recognizing Apple was not a technology company but a consumer products company with extraordinary brand loyalty and switching costs. The position grew to represent over 40% of the equity portfolio at its peak and generated tens of billions in unrealized gains. Buffett began trimming the position in 2023-2024, partly for tax reasons, partly as valuation discipline.
By mid-2024, Berkshire had accumulated over $275 billion in cash and short-term Treasury bills — a figure that drew significant attention and speculation about deployment intentions. Buffett's explanation: the right acquisition at the right price hadn't appeared, and holding cash was preferable to overpaying. The cash pile also reflects Buffett's assessment that current equity valuations offer limited margin of safety.
Warren Buffett, born in 1930, has led Berkshire for nearly 60 years. Greg Abel, Vice Chairman for Non-Insurance Operations, has been designated as his successor. The transition question — whether Berkshire's culture, investment discipline, and decentralized operating model can survive without its founder — is the most significant uncertainty facing the company's long-term investors. Buffett has argued that Berkshire's culture is durable because it is embedded in the business structure, not just in his personality. The evidence will come after he is gone. See buy and hold investing and value vs growth investing.
Market capitalization: approximately $1.10 trillion; trailing P/E: approximately 19–23x depending on treatment of investment gains; latest reported book-value multiple: approximately 1.44x. Berkshire’s GAAP earnings remain unusually volatile because unrealized investment gains and losses flow through reported net income. These figures reflect market data available on September 14, 2026.
This snapshot is informational, not investment advice. Market prices and valuation multiples change continuously; readers should check the company’s latest filing and current quote before making decisions.