The Power of Investing in Berkshire Hathaway

Spoiler: You would be quite pleased with your investment's current value.

Warren Buffett is widely recognized as one of the greatest investors of all time. Over nearly six decades, he has managed to increase the value of shares of his company, Berkshire Hathaway (BRK.A) (BRK.B), at an impressive average annual rate of 19.8%. In comparison, the S&P 500 index has averaged just 10.2% annually during the same time period.

Let’s take a closer look at what your investment would be worth today if you had invested $95 in Berkshire Hathaway in 1965, the year Buffett took charge of the struggling textile company. At that time, a single share was priced around $19.

Buffett has long been known for his aversion to stock splits. However, he did create a second class of shares—class B shares—which are priced lower and designed to be more accessible. In this arrangement, 30 class B shares are equivalent to one class A share. Additionally, he executed a 50-to-1 split of these class B shares when acquiring the Burlington Northern Santa Fe (BNSF) railroad. Today, this means one class A share equates to 1,500 class B shares, which are currently trading for about $460 each.

Importantly, class A shares have never undergone a split. If you had purchased approximately $100 worth of class A shares in 1965, that would have equated to about five shares, totaling a $95 investment. Currently, class A shares are trading for nearly $700,000 each. Thus, if you held those five shares since that time, they would now be worth close to $3.5 million! All of this from an initial investment of a mere $95 almost 59 years ago.

For those who aren't Berkshire Hathaway shareholders yet, it is still possible to invest by purchasing class B shares. By doing so, you would become a part-owner of a diverse portfolio, which includes companies such as the insurer GEICO, Benjamin Moore paints, and See's Candies. Additionally, your investment would also provide you with exposure to Berkshire's substantial stock portfolio, including notable positions in companies like Apple and American Express.

Overall, there are numerous appealing aspects of Berkshire Hathaway, and its future continues to look bright, even if growth may not be as rapid as in previous decades.

Investment, Berkshire, Buffett