Berkshire Hathaway

Our humble story

Berkshire Hathaway, American holding company based in Omaha, Nebraska, that serves as an investment vehicle for Warren Buffett. In the early 21st century, it was one of the largest corporations, measured by revenues, in the United States. The company was also notable for the high price of its stock (more than $250,000 for one Class A share in 2017) and the small size of its headquarters staff (about 25 people).

Berkshire Hathaway traces its history back to two Massachusetts textile firms: Hathaway Manufacturing Company (incorporated 1888) and Berkshire Cotton Manufacturing Company (incorporated 1889). Berkshire Cotton became Berkshire Fine Spinning Associates in 1929 and merged with Hathaway to form Berkshire Hathaway, Inc., in 1955. An investment group led by Buffett took full control of the company in 1965. Berkshire Hathaway liquidated its textile operations in 1985, by which time it was well-established as a holding company for Buffett’s other investments and corporate acquisitions.

Warren Buffet

On May 6, 1964, Berkshire Hathaway, then run by a man named Seabury Stanton, sent a letter to its shareholders offering to buy 225,000 shares of its stock for $11.375 per share. I had expected the letter; I was surprised by the price.

Berkshire then had 1,583,680 shares outstanding. About 7% of these were owned by Buffett Partnership Ltd. (“BPL”), an investing entity that I managed and in which I had virtually all of my net worth. Shortly before the tender offer was mailed, Stanton had asked me at what price BPL would sell its holdings. I answered $11.50, and he said, “Fine, we have a deal.” Then came Berkshire’s letter, offering an eighth of a point less. I bristled at Stanton’s behavior and didn’t tender.

That was a monumentally stupid decision.