Warren Buffett CEO of Berkshire Hathaway has ridden herd on one of the most successful business stories in history

You can’t talk about Berkshire Hathaway and its amazing history without talking about its founder, Wall Street legend Warren Buffet.

Buffet’s blend of homespun common sense and home run stock picks has made the Sage of Omaha a household word not just on Wall Street, but on Main Street, too. 

Buffett has made a fortune (he's worth $85 billion as of February, 2020) as one of the world’s savviest value investors, especially as a meticulous evaluator of potential stocks. His calling card then and now is an uncanny ability to select companies whose share prices are undervalued.

Along with his partner, Charlie Munger, Buffett has turned Berkshire Hathaway into a powerhouse on the U.S. business landscape. Each year, Buffett and Munger, along with legions of company stockholders, celebrate Berkshire Hathaway’s success at its annual shareholders meeting in Omaha.

The topic on the menu. How the founders built a $485 billion company, and what the plans are to keep the gravy train rolling for another year, with Buffett at the helm.

Here’s a snapshot of Berkshire Hathaway - its history, its business philosophy, and Buffet’s role in creating a stock-picking blockbuster of a company, ensconced securely in the heart of the great American plains.

Berkshire Hathaway: The Early Years

Warren Buffett was born in Omaha, Nebraska, August 30, 1930. He came from a business family – his grandparents owned a grocery business and his father was an investment specialist and later was elected to Congress in 1942.

Warren Buffett purchased his first stock, Cities Service Preferred, for $38 a share when he was 11 years old. Buffett took to stock-picking like a seasoned professional, and had amassed approximately $53,000 in portfolio assets (in today’s dollars) by the time he was 16 years old.

His early lessons on stock picking have held firm over the decades. As a young investor, Buffett learned that picking stocks was tough, so when he found a good one, he hung on to it as long as he could.

Buffett continued investing into his 20s and at 32 years old, uncovered a New England textile company called Berkshire Hathaway.

Founded in 1839 as the Valley Falls Company (so named because it resided in Valley Falls, R.I.), the company owned multiple textile companies in the region, and eventually merged into the Hathaway Manufacturing Company in 1888.

After decades of industry growth, Hathaway Manufacturing and Berkshire Fine Spinning Associates merged in 1955. That company, headquartered in Bedford, Mass., employed 12,000 workers and generated more than $120 million in annual revenues, making the newly formed Berkshire Hathaway as one of the most successful textile firms in the U.S.

Yet by the end of the 1950s, the U.S. textile industry fell into disrepair, and Berkshire-Hathaway fell with it, losing seven of 15 plants in the New England region, setting up an uncertain future for the company.

Even with the company’s troubles, Buffett remained a believer. In 1962, intrigued by the company’s long-term business success and strong balance sheet, Buffett began buying up Berkshire Hathaway stocks, at a price of $7.60 a share.

By 1965, he owned a total of $14 million in Berkshire Hathaway stock, and wound up taking control of the company in May of that year. At that point, the company was a shell of its former self, with only two manufacturing plants and just over 2,000 employees – down from 12,000 in its glory days.