Berkshire Hathaway, as everyone knows, is the company that Warren Buffett built and ran for 60 years until he stepped down as CEO at the end of last year and as chairman in September, handing over the reins to new CEO Greg Abel.
The insurance-based conglomerate has grown and flourished during Buffett’s stewardship with a market cap of $1.23 trillion, making it the 13th-most valuable company in the world. Since 1965, when Buffett took control of the company, Berkshire Hathaway stock has had an average annual return of 19.7%, nearly twice the 10.5% average return for the S&P 500 over the same period.
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It has undoubtedly been one of the best, most reliable stocks for investors over the past six decades, not only for its high returns but also for its steadiness and stability. Over those 60 years, Berkshire Hathaway stock beat the S&P 500 in 40 of them and had negative returns in only 11 of them.
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While its performance is clear, what you actually get when you buy Berkshire Hathaway stock is not as clear to many investors. It doesn’t really make anything, like Apple (NASDAQ:AAPL), Nvidia (NASDAQ:NVDA), or Procter & Gamble (NYSE:PG), and it doesn’t really sell anything, at least directly.
It is a conglomerate that owns a lot of companies that do provide products and services. Specifically, it owns some 70 companies, including a railroad, many insurance companies, some construction and industrial firms, and consumer brands like Benjamin Moore, Dairy Queen, and Duracell, to name a few.
Often, that’s forgotten because so much media and investor attention is on its $335 billion portfolio of stocks. But what has really sustained Berkshire Hathaway over the years is all the companies it does own and the earnings they generate.
Here’s what you get when you buy Berkshire Hathaway stock.
In Warren we trust
For many years, as the Oracle of Omaha’s reputation as an investor grew, many people invested in Berkshire Hathaway mainly because of their faith in Buffett — in Warren we trust.
Buffett has now stepped down as both CEO and chairman, and Abel runs the show, so some may wonder whether things will change. But Abel has learned at Buffett’s side for some 26 years, and the culture that Buffett built remains.
In his first letter to shareholders back in February, Abel wrote:
