Acquired · Berkshire Hathaway · Overview
Berkshire Hathaway
Float as free leverage, quality at a fair price, and 57 years of compounding — the most studied capital allocation system in history.
Major events · 1839–2022
- 1839Founding
Valley Falls Company founded — New England textile roots
The industrial ancestor of Berkshire Fine Spinning, eventually Berkshire Hathaway. A century of New England textile consolidation.
Acquired Berkshire Part I
- 1955Strategic shift
Berkshire Fine Spinning merges with Hathaway Manufacturing
Creates Berkshire Hathaway Inc. in its modern corporate form. Still a declining textile business; the merger is defensive, not strategic.
Acquired Berkshire Part I
- 1962Financing
Buffett Partnership begins buying BRK shares
Buffett sees the stock trading below net working capital — a classic Ben Graham cigar-butt. He starts accumulating with no intention of running a textile company.
Acquired Berkshire Part I
- 1965Strategic shift
Buffett takes control of Berkshire Hathaway
After a failed commitment from the CEO on a share repurchase price, Buffett bought enough shares to take over. He later said this was a mistake: the proper move was to extract the capital and shut the business, not to take over a dying industry.
Acquired Berkshire Part I
- 1967Acquired co.
National Indemnity acquired — the float model begins
Jack Ringwalt sells National Indemnity for $8.6M during one of his annual 'I want to sell' moments. Buffett immediately grasped that insurance float was free leverage. The float funded every major acquisition that followed.
Acquired Berkshire Part I
- 1972Acquired co.
See's Candies acquired — first quality-company bet
Blue Chip Stamps (Berkshire affiliate) buys See's Candies for $25M. Over 50 years, See's generated $2B+ in pre-tax earnings on essentially no incremental capital. Munger pushed Buffett to pay up for quality; it changed his investment philosophy permanently.
Acquired Berkshire Part I
- 1978Leadership
Charlie Munger joins as Vice Chairman
Munger formalizes his partnership with Buffett at Berkshire. His influence — 'buy wonderful companies at fair prices rather than fair companies at wonderful prices' — had already changed Buffett's philosophy via See's.
Acquired Berkshire Part II
- 1985Strategic shift
Textile mills closed — 20 years after control
Buffett shuts the original Berkshire textile business. He later called the 1965 acquisition his single biggest mistake: the correct move was extracting capital from a bad business immediately, not trying to run it well.
Acquired Berkshire Part I
- 1988Financing
Berkshire begins buying Coca-Cola — largest equity position
Buys $1B of Coca-Cola stock (6.2% of the company) over several months. The position is still held. By 2024 the cost basis is $1.3B against a market value of ~$25B.
Acquired Berkshire Part II
- 1996Product
GEICO acquired in full — largest insurance acquisition
Berkshire had held a partial stake since 1976. Acquires the rest for $2.3B. GEICO's low-cost direct distribution model (no agents) is an operating moat Buffett explicitly prizes. Float grows dramatically.
Acquired Berkshire Part II
- 2010Acquired co.
BNSF Railway acquired — 'all-in bet on America'
At $44B, the largest acquisition in Berkshire history. BNSF carries 40% of US western freight. Buffett framed it explicitly as a long-term bet on American economic growth. Regulated returns, capital intensity, but a real competitive moat.
Acquired Berkshire Part III
- 2022Strategic shift
Occidental Petroleum — $60B+ position built
Berkshire begins accumulating Occidental stock and warrants, ultimately crossing 25% ownership. A return to energy infrastructure as the world reprices fossil-fuel assets.
Acquired Berkshire Part III + public disclosures
Origin
Buffett's thesis was not to build a textile company — it was to use an undervalued cigar-butt asset to extract capital and redeploy it at higher rates of return than the industry could generate. The textile mills were the funding mechanism, not the business.
Berkshire traces to 1839 New England textile mills. Warren Buffett began buying shares in 1962 through his partnership, recognizing the company as a net-asset play even as the textile business deteriorated. He gained control in 1965. The textile mills ran until 1985 — Buffett has since called the acquisition his biggest mistake, because he continued to sink capital into an unwinnable industry when he should have cut and redeployed immediately. The real Berkshire story begins with the first insurance acquisition: National Indemnity in 1967, for $8.6M. Insurance float — premiums held before claims are paid — became the free leverage that funded every major acquisition for the next five decades. Charlie Munger joined as vice-chairman in 1978 and shifted Buffett from buying mediocre companies at cheap prices to buying great companies at fair prices.
Key facts
Book value per share (2024)
~$460K
National Indemnity acquisition (1967)
$8.6M
Insurance float (2023)
~$168B
Cash + T-bills held (2024 Q3)
~$325B
BNSF Railway acquisition
$44B
Episodes · 3 covering this company