By Lawrence A. Cunningham, who will discuss his new book, Berkshire Beyond Buffett: The Enduring Value of Values, at Washington University’s Olin School in St. Louis on Wednesday February 25 at 4:00 pm. Special guests include Tom Manenti, CEO of Berkshire’s MiTek subsidiary.
Berkshire Hathaway, the conglomerate Warren Buffett built, is vast and unconventional. Yet despite unusual traits, the company’s success comes down to favoring old-fashioned business values like trust and thrift while shunning the fast buck and debt. For businesses of all sizes, it offers a model worth emulating.
If Berkshire were a country and its revenues its gross domestic product, the company would be among the world’s top 50 economies. Berkshire’s cash alone exceeds the total assets of all but the largest corporations. While Warren Buffett became famous as a stock picker, he built Berkshire through insurance companies and today oversees a hodgepodge of wholly-owned businesses, including a popular US auto insurer (GEICO), a large railroad (BNSF), a huge energy company, and pacesetters in fields as different as diamonds and mobile homes.
Although not every business always outperforms, overall Berkshire has beaten the broader stock market for its shareholders 80 percent of the time, often by double digits. Berkshire’s average annual gain has doubled that of the Standard & Poor’s 500 index, a cross-section of public company stocks. With a market value of $350 billion, Berkshire has generated great wealth for all its constituencies.