Berkshire Hathaway (BRK.A 0.36%) (BRK.B 0.21%) has gained quite a reputation since legendary investor Warren Buffett took over the company in 1965. Since that takeover nearly six decades ago, Berkshire grew to become one of the largest companies in the world, earning Buffett that reputation as one of the greatest investors ever. Berkshire's stock emphatically beat the S&P 500, a broader benchmark for the market, in this time frame as well and generated some incredible returns for investors.
Let's go back to the beginning and look at how much an investor who purchased $100 of Berkshire's stock in 1965 would have now if they held on to the shares.
Building a dynasty
In 1962, a much younger Warren Buffett took interest in Berkshire Hathaway, which at the time was a textile manufacturer that had been struggling along with the U.S. textile industry. Buffett and his firm began buying shares in 1962, and three years later Buffett owned the company.
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A few years after that, Buffett began his foray into the insurance space, an ideal path for a guy who likes to invest in individual stocks because the insurance business generates cash from premiums that can be invested in bonds or stocks. Berkshire began investing in GEICO in the 1970s and would go on to purchase the company outright in 1996.
Since then, Berkshire also waded into other sectors and owned companies in the publishing, banking, mortgage, and energy sectors, and the company is still heavily involved in the mortgage and energy sectors today.
Also in 1996, Berkshire created Class B shares in an effort to give smaller investors better access to the large conglomerate. Class B shares went through a stock split later on, but the original Class A shares have never undergone a split, and Buffett has said they never will.
In 2009, during the Great Recession, Buffett and Berkshire made a huge bet on the recovery of the U.S. economy and paid $34 billion to purchase Burlington Northern Santa Fe, the largest freight railroad company in North America. Berkshire also assumed $10 billion of the company's debt, making the purchase Berkshire's largest ever.
Buffett continued to build Berkshire's large equities portfolio. Today, that portfolio has more than $313 billion in invested assets, as well as $109 billion in cash. Buffett continues to invest in a lot of the industries he loves, including banks, insurance, media companies, and consumer staples.
In the 21st century, Berkshire also got more involved in the tech sector, especially as Buffett, who is now 92 years old but still serves as CEO, handed off responsibility to younger members of the team. Berkshire began buying shares of consumer tech giant Apple (AAPL -0.81%) in 2016, and the company now makes up a staggering 37% of Berkshire's invested assets.
Nearly all of Buffett's moves have translated into phenomenal performance, with Berkshire's stock posting compound annual gains of more than 20% between 1965 and 2021. The S&P 500 posted only 10.5% average annual gains over the same time period (including dividends). Berkshire also soundly beat the market during the difficult year we just had in 2022.
If you invested $100 in 1965...
When Buffett took control of Berkshire Hathaway in 1965, shares were valued at about $19. Today, Class A shares trade for around $459,800, which represents a mind-boggling return of 2,419,900%. That means $100 invested in 1965 would now be worth roughly $2.42 million.
That also compares very favorably with a $100 investment in the S&P 500, which would be worth only about $22,400 now, which is certainly nothing to scoff at but just a fraction of what you would have made having invested in Berkshire.
