Profiles On Who We Watch
Although the name Berkshire Hathaway is not synonymous with its chairman
and CEO, Warren E. Buffett--the greatest investor of all time--it definitely
should be. Despite Berkshire’s origins in the textile industry it
was not until 1964, when Buffett stepped into the driver’s seat of
this holding company, that Berkshire really started to post astonishing
gains year in and year out.
Buffett’s investing ideals are by no means original. He is the prodigy
student of Ben Graham, the father of value investing, but Buffett's educational
influences did not stop there. He combined what Graham taught with the investment
principles of Philip Fisher. Fisher focused on what a company did and how it
made money, stressing the qualitative fundamental characteristics of companies.
By combining the teachings of both Graham and Fisher, Buffett, through his
Berkshire investing vehicle, has been able to post unfathomable annual returns.
In adhering to the principles of value investing, Buffett is the personification
of patience and discipline, two characteristics often in short supply in money
managers. His buy-and-hold strategy had proven extremely profitable over the
last 40 years. Berkshire’s so-called “bread and butter” is
the insurance business, and amongst other insurance companies, Berkshire wholly
owns the GEICO Corporation. The reveune from this stream of business was over
$1.5 billion in 2004. But do not let this mislead you; Buffet shows little
hesitation to invest in other sectors of the economy, as long as he feels he
is getting a good deal. View Buffett's holdings now - click here.
Some of the most important factors value investors analyze are such things
as ROE, debt-to-equity and price-to-book ratios, all in an effort to determine
a company’s intrinsic value. If Buffett deems a company’s intrinsic
value to be higher than its current price, and its management and business
operations to be sustainable, he will almost certainly invest. However, based
on his staple of only about 30 stocks, it is fairly apparent that very few
companies pass the Warren E. Buffett invest-ability test.
Although we can talk all about Buffett’s accolades over the past 40
years, the numbers speak for themselves. Suffice to say that keeping an eye
on the holdings of Warren Buffett is a good idea. If you are not watching the
best investor in the world, who are you watching?
Berkshire Hathaway |
Average Annual Return |
3-Year |
5-Year |
| Common Stock (BRK.a/b) |
21.9% |
8.48% |
9.48% |
| S&P 500(Benchmark) |
10.4% |
17.17% |
0.64% |
|