Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) is a conglomerate that owns roughly 70 businesses, as well as a massive stock portfolio. Though the company dates back to 1888, Berkshire Hathaway is practically synonymous with Warren Buffett, its chairman and CEO, who is often regarded as the best stock picker in history.
Since Buffett -- also known as the Oracle of Omaha -- took a majority stake in Berkshire Hathaway in 1965, the conglomerate has had compound annual gains of 19.9%, compared to 10.4% for the S&P 500 index. Between 1965 and 2024, that translates to gains of 5,502,284% (assuming dividend reinvestment) versus 39,054% for the S&P 500.
Berkshire Hathaway's investment strategy
Buffett's investment philosophy has been at the heart of Berkshire Hathaway's success over the past six decades. The Oracle of Omaha's investment strategy includes:
- A buy-and-hold approach to investing: Buffett has never been a proponent of short-term trading and has often said that his favorite holding period is "forever."
- Invest in what you know: Berkshire Hathaway's portfolio is heavy on financial companies, consumer goods businesses, and utilities, reflecting a key Buffett maxim: "Never invest in a business you cannot understand."
- Focus on intrinsic value: Instead of focusing on a business's market value on a given day, Buffett has long focused on its intrinsic value, or actual worth, based on factors like current and future earnings, the stability of its cash flow, and whether the business has a manageable level of debt.
- Look for wide economic moats. Buffett looks for businesses with wide economic moats, meaning they have a durable competitive advantage due to factors like high switching costs, network advantages, regulatory barriers, and cost advantages.
- Diversification is overrated: Buffett doesn't shy away from having a concentrated position in a single industry or company, and he largely avoids some industries altogether. For example, Berkshire has typically steered clear of tech stocks. One major exception is Apple, in which the company owns a substantial stake.
Legacy and impact
Berkshire Hathaway's success has taught generations of investors that building wealth is a long-term game and that it's possible to earn enormous returns while following a strong ethical code.
The company's legacy is inextricably bound to that of Buffett and the late Charlie Munger. One big question is whether the conglomerate's enormous success will continue without Uncle Warren. Buffett, who turned 95 on Aug. 30, 2025, announced that he will retire at the end of 2025, though he will still serve as the company's chairman.
Greg Abel, Berkshire Hathaway's vice-chairman of non-insurance operations, will step into the role of CEO when Buffett retires. Buffett handpicked Abel for the role in 2021 and told Berkshire shareholders in May that he hopes the new CEO will have a long tenure.
"The more years that Berkshire gets out of Greg, the better," Buffett said.
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