Berkshire Hathaway Inc.
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Company History
Founded 1839 in Omaha, Nebraska
In 1962, Warren Buffett noticed a failing Rhode Island textile manufacturing company called Berkshire Hathaway. It was a terrible business, but the stock was trading cheaper than the company's liquidation value. He bought shares, expecting to sell them back when the company closed a mill. The CEO, Seabury Stanton, verbally promised to buy Buffett's shares for $11.50, but the official written offer came in at $11.37. Infuriated by the 13-cent betrayal, Buffett refused to sell, bought enough stock to take control of the entire company, and fired Stanton, accidentally acquiring the corporate shell that would define his life.
Berkshire Hathaway is famous not for the men who originally founded it, but for the man who conquered and reinvented it. The original company, the Valley Falls Company, was a textile manufacturer established by Oliver Chace in Rhode Island in 1839. Through a series of mergers over the next century, it combined with the Berkshire Fine Spinning Associates and the Hathaway Manufacturing Company, eventually becoming Berkshire Hathaway in 1955. By the early 1960s it was a failing textile mill in New Bedford, Massachusetts, operating in an industry being decimated by cheap foreign competition. Enter Warren Buffett. In 1962, Buffett—then a young, successful investment manager running a partnership in Omaha—noticed a pattern in Berkshire's stock price. Whenever the company closed a mill and sold off equipment, management would use the proceeds to buy back shares, causing a brief bump in the stock price. Buffett began buying shares to profit from this spread. In 1964, Berkshire's management made a verbal offer to buy out Buffett's stake for $11.50 per share, but subsequently sent a written tender offer for only $11.375. Incensed by being shortchanged by 12.5 cents, a furious Buffett refused to sell. Instead, he bought more stock, took a controlling interest, and fired the management team. Buffett would later famously call this emotional acquisition the 'dumbest stock I ever bought,' calculating that tying up his capital in a dying textile business cost him hundreds of billions of dollars in compounded returns over his lifetime. However, he salvaged the mistake. Realizing the textile mills would never generate adequate returns, he began using the meager cash flows they produced to buy insurance companies. He used the insurance premiums ('float') to buy a bank in Illinois, then a newspaper, then a candy company (See's Candies). By 1985, he had permanently closed the last of the textile operations, but kept the name. Today, the name Berkshire Hathaway represents not a textile mill, but the ultimate expression of Warren Buffett and Charlie Munger's philosophy of value investing and decentralized corporate management.
Warren Buffett effectively refounded Berkshire Hathaway beginning in 1965 when his investment partnership gained control of the struggling New England textile company and he became its chairman and CEO. Over the following six decades, Buffett transformed Berkshire from a failing textile operation into one of the world's most valuable and admired companies, deploying insurance float into a diverse portfolio of wholly-owned businesses and publicly traded equities. Buffett's investment approach—patient, value-oriented, concentrated, and long-term—generated compound annual returns that significantly outpaced the S&P 500 over his tenure. He is widely regarded as the greatest investor in history. His annual letters to Berkshire shareholders have become required reading in business schools worldwide for their clarity of thought, ethical grounding, and practical wisdom about capital allocation. Buffett has pledged to donate virtually his entire fortune to philanthropy through the Giving Pledge he co-founded with Bill and Melinda Gates. As of mid-2025, Buffett retains the chairman role at Berkshire while Greg Abel manages day-to-day operations.
Oliver Chace establishes the Valley Falls Company in Valley Falls, Rhode Island, as a cotton textile manufacturer. This predecessor company is the earliest corporate ancestor of what will become Berkshire Hathaway nearly 185 years later.
Berkshire Fine Spinning Associates merges with Hathaway Manufacturing Company of New Bedford, Massachusetts, to form Berkshire Hathaway Inc. The merged company operates multiple textile mills across New England and employs approximately 12,000 workers, but faces mounting competitive pressure from lower-cost Southern and overseas producers.
Warren Buffett's investment partnership acquires a controlling interest in Berkshire Hathaway and Buffett is named chairman and CEO. Buffett initially intends to sell the stock at a profit but is drawn into operational control after a dispute with management over tender offer terms. This acquisition, which Buffett later calls his 'biggest mistake,' becomes the foundation of his business empire.
Berkshire acquires National Indemnity Company and National Fire & Marine Insurance Company from Jack Ringwalt for $8.6 million. These acquisitions introduce Buffett to the insurance float concept that will define Berkshire's business model for the next five decades. National Indemnity remains one of Berkshire's most important subsidiaries.
Berkshire acquires See's Candies of San Francisco for $25 million, which Buffett later calls the most important acquisition of his career. See's demonstrates the extraordinary economics of a branded consumer business with pricing power and loyal customers. Over the following decades, See's generates more than $2 billion in cumulative pre-tax earnings on its original purchase price.
Berkshire closes its last textile manufacturing operations twenty years after Buffett took control. The mills had been drained of cash that was redeployed into far more productive enterprises. The closure results in significant job losses in New England communities but ends two decades of capital misallocation into a structurally disadvantaged industry.
Berkshire acquires the remaining 50% of GEICO Corporation it does not already own for approximately $2.3 billion, making GEICO a wholly-owned subsidiary. GEICO, founded in 1936 as the Government Employees Insurance Company, becomes the centerpiece of Berkshire's insurance operations and eventually grows to insure more than 18 million vehicles across the United States.
Berkshire acquires General Re Corporation for approximately $22 billion in stock—the largest acquisition in Berkshire's history at the time. General Re provides global property and casualty reinsurance operations and significantly expands Berkshire's insurance float. The acquisition has some early challenges related to derivatives exposure but ultimately strengthens Berkshire's global insurance position.
Berkshire acquires Burlington Northern Santa Fe Corporation (BNSF) for approximately $44 billion including assumed debt—at the time the largest acquisition in Berkshire's history. Buffett calls it a 'all-in wager on the economic future of the United States.' BNSF operates 32,500 route miles across 28 states and becomes one of Berkshire's most important wholly-owned subsidiaries.
Berkshire acquires Precision Castparts Corp., a manufacturer of aerospace and industrial components, for approximately $37.2 billion—surpassing the BNSF acquisition as Berkshire's largest ever. The acquisition significantly expands Berkshire's manufacturing presence in aerospace supply chains. Precision Castparts faces challenges during the COVID-19 pandemic as commercial aviation collapses temporarily.
Warren Buffett publicly confirms that Greg Abel, vice chairman for non-insurance operations, is his designated successor as CEO of Berkshire Hathaway. This announcement ends decades of speculation about Berkshire's succession plan and begins a gradual transition of operational authority from Buffett to Abel that continues through 2024 and into 2025.
Berkshire reports record operating earnings of approximately $47.4 billion for FY2024 and ends the year with a record cash and Treasury bill position of $334 billion—reflecting both strong business performance and Buffett's unwillingness to deploy capital at prices he considers inadequate. The company reduces its Apple stake from over 900 million shares to approximately 300 million shares throughout the year.
Berkshire acquired the remaining 50% of GEICO it did not already own to make the auto insurer a wholly-owned subsidiary, giving Berkshire full control over what it viewed as America's most cost-efficient personal auto insurer. The acquisition expanded Berkshire's insurance float significantly and positioned GEICO for aggressive growth through its direct-to-consumer model. Buffett had been attracted to GEICO since his early investing days, when he visited the company's headquarters as a young man after reading about Benjamin Graham's position in the stock.
Berkshire acquired General Re in an all-stock transaction to gain a major global reinsurance platform and significantly expand its insurance float. General Re was one of the world's preeminent property and casualty reinsurers with operations across North America, Europe, and Asia, providing Berkshire with global diversification in its insurance operations. The acquisition also brought a substantial investment portfolio that Buffett intended to rebalance toward Berkshire's preferred investment approach.
Berkshire acquired BNSF in what was at the time the largest acquisition in the company's history, expressing Buffett's conviction that freight railroads are essential infrastructure for the American economy with sustainable competitive moats. BNSF's 32,500 route miles across 28 states represented a natural monopoly in many of the geographies it served, with barriers to entry—capital requirements, right-of-way, regulatory approvals—that effectively precluded new competitors. Buffett called it a 'all-in wager on the economic future of the United States.'
Berkshire acquired Precision Castparts to gain a market-leading manufacturer of complex metal components and fastener systems for aerospace, power generation, and industrial markets. PCC's position in aerospace supply chains—providing investment castings and forged components to Boeing, Airbus, and military programs—offered the kind of essential, technically complex manufacturing that Buffett considers difficult to replicate. The acquisition made Berkshire a major participant in commercial aviation supply chains.
Berkshire acquired McLane Company from Walmart which was divesting the distribution subsidiary as part of a strategic focus on its core retail operations. McLane operates one of the largest wholesale distribution networks in the United States, serving convenience stores, drug stores, military commissaries, and quick-service restaurants. The acquisition gave Berkshire ownership of critical supply chain infrastructure for the convenience retail sector with strong, long-term customer relationships.
Since its establishment in 1839, Berkshire Hathaway Inc. expanded from an early-stage venture into a recognized leader in Diversified Holding Company / Financial Services, overcoming key market challenges.
Over its history, Berkshire Hathaway Inc. executed decisive strategic pivots toward scalable monetization and digital distribution, securing its current market leadership.
By continually modernizing operations and embracing operating margin expansion, Berkshire Hathaway Inc. maintains resilience through changing technological and economic cycles.