Berkshire Hathaway

Accuracy score :
97%

Berkshire Hathaway Inc is a holding company owning subsidiaries engaged in a large number of diverse business activities. The most important of these are insurance businesses conducted on both a primary basis and a reinsurance basis, a freight rail transportation business and a group of utility and energy generation and distribution businesses. Berkshire also owns and operates numerous other businesses engaged in a variety of activities, as identified herein. Berkshire is domiciled in the state of Delaware, and its corporate headquarters is in Omaha, Nebraska. Berkshire’s operating businesses are managed on an unusually decentralized basis. There are essentially no centralized or integrated business functions (such as sales, marketing, purchasing, legal or human resources) and there is minimal involvement by Berkshire’s corporate headquarters in the day-to-day business activities of the operating businesses. Berkshire’s corporate senior management team participates in and is ultimately responsible for significant capital allocation decisions, investment activities and the selection of the Chief Executive to head each of the operating businesses. Berkshire and its consolidated subsidiaries employ approximately 391,500 people worldwide.

 

Berkshire Hathaway first seeks to invest in the many and diverse businesses it already owns. During the past decade, Berkshire’s depreciation charges have aggregated $65 billion whereas the company’s internal investments in property, plant and equipment have totaled $121 billion. Reinvestment in productive operational assets will forever remain its top priority.

Berkshire Hathaway constantly seeks to buy new businesses that meet three criteria. First, they must earn good returns on the net tangible capital required in their operation. Second, they must be run by able and honest managers. Finally, they must be available at a sensible price. When they spot such businesses, their preference would be to buy 100% of them. But the opportunities to make major acquisitions possessing their required attributes are rare. Far more often, a fickle stock market serves up opportunities for Berkshire Hathaway to buy large, but non-controlling, positions in publicly-traded companies that meet its standards.

Whichever way they go – controlled companies or only a major stake by way of the stock market – Berkshire’s financial results from the commitment will in large part be determined by the future earnings of the business they have purchased. Nonetheless, there is between the two investment approaches a hugely important accounting difference, essential for you to understand.

  • In its controlled companies, (defined as those in which Berkshire owns more than 50% of the shares), the earnings of each business flow directly into the operating earnings that Berkshire report to you. What you see is what you get
  • In the non-controlled companies, in which Berkshire owns marketable stocks, only the dividends that Berkshire receives are recorded in the operating earnings that Berkshire reports. The retained earnings? They’re working hard and creating much added value, but not in a way that deposits those gains directly into Berkshire’s reported earnings
  • To the Shareholders of Berkshire Hathaway Inc.: Berkshire earned $81.4 billion in 2019 according to generally accepted accounting principles (commonly called “GAAP”).

Here is the list of 10 largest stock-market holdings of businesses

Source: 2019 annual report

Below is a list of its fifteen common stock investments that at yearend had the largest market value. Berkshire excludes its Kraft Heinz holding – 325,442,152 shares – because Berkshire is part of a control group and therefore must account for this investment on the “equity” method. On its balance sheet, Berkshire carries the Kraft Heinz holding at a GAAP figure of $13.8 billion, an amount that represents Berkshire’s share of the audited net worth of Kraft Heinz at December 31, 2019. Please note, though, that the market value of its shares on that date was only $10.5 billion.

Source: 2019 annual report

Below you can see the list with all investment, last updated on February 14, 2020, 9:06 pm based on SEC 13F filings

 

No.

Security

Ticker

Shares

Value (x$1000)

Activity

% Port

1.

Apple Inc.

AAPL

245,155,566

$71,989,933

-2%

29.74%

2.

Bank Of America Corp

BAC

925,008,600

$32,578,803

-1%

13.45%

3.

Coca Cola Co

KO

400,000,000

$22,140,000

 

9.14%

4.

American Express Co

AXP

151,610,700

$18,874,016

 

7.79%

5.

Wells Fargo & Company

WFC

323,212,918

$17,388,855

-15%

7.18%

6.

Kraft Heinz Co

KHC

325,634,818

$10,462,647

 

4.32%

7.

Jpmorgan Chase & Co

JPM

59,514,932

$8,296,382

 

3.42%

8.

Us Bancorp

USB

132,459,618

$7,853,532

 

3.24%

9.

Moodys Corp

MCO

24,669,778

$5,856,852

 

2.41%

10.

Delta Air Lines Inc.

DAL

70,910,456

$4,146,844

 

1.71%

11.

Bank Of New York Mellon Corp

BK

79,765,057

$4,014,575

-2%

1.65%

12.

Davita Inc.

DVA

38,565,570

$2,893,575

 

1.19%

13.

Southwest Airlines Co

LUV

53,649,213

$2,895,985

 

1.19%

14.

Goldman Sachs Group Inc

GS

12,004,751

$2,760,252

-35%

1.14%

15.

General Motors Co

GM

75,000,000

$2,745,000

4%

1.13%

16.

Charter Communications Inc.

CHTR

5,426,609

$2,632,339

 

1.08%

17.

Verisign Inc

VRSN

12,952,745

$2,495,735

 

1.03%

18.

Visa Inc.

V

10,562,460

$1,984,686

 

0.81%

19.

United Airlines Holdings Inc.

UAL

21,938,642

$1,932,575

 

0.79%

20.

Starz Acquisition Llc

STRZA

31,090,985

$1,496,721

 

0.61%

21.

Mastercard Inc

MA

4,934,756

$1,473,469

 

0.6%

22.

Pnc Financial Services Group Inc.

PNC

8,671,054

$1,384,160

 

0.57%

23.

Costco Wholesale Corp W

COST

4,333,363

$1,273,662

 

0.52%

24.

American Airlines Group Inc.

AAL

42,500,000

$1,218,900

-3%

0.5%

25.

Amazon Com Inc

AMZN

537,3

$992,844

 

0.41%

26.

Sirius Xm Holdings Inc.

(SIRI)

136,275,729

$974,372

 

0.4%

27.

M&t Bank Corp

MTB

5,382,040

$913,602

 

0.37%

28.

Occidental Petroleum Corp

OXY

18,933,054

$780,231

154%

0.32%

29.

Synchrony Financial

SYF

20,803,000

$749,116

 

0.3%

30.

Axalta Coating Systems Ltd.

AXTA

24,264,000

$737,626

 

0.3%

31.

Starz Acquisition Llc

STRZA

14,860,360

$718,350

 

0.29%

32.

Store Capital Corp

STOR

18,621,674

$693,471

 

0.28%

33.

Globe Life Inc

 

6,353,727

$668,730

 

0.27%

34.

Stoneco Ltd.

STNE

14,166,748

$565,112

 

0.23%

35.

Kroger Co

KR

18,940,079

$549,073

NEW

0.22%

36.

Restaurant Brands International Inc.

QSR

8,438,225

$538,106

 

0.22%

37.

Suncor Energy Inc New

SU

15,019,031

$492,624

40%

0.2%

38.

Liberty Global Inc.

LBTY

19,791,000

$450,047

 

0.18%

39.

Teva Pharmaceutical Industries Ltd

TEVA

43,249,295

$423,843

 

0.17%

40.

Rh

RH

1,708,348

$364,732

42%

0.15%

41.

Biogen Inc.

BIIB

648,447

$192,414

NEW

0.07%

42.

Liberty Global Inc.

LBTY

7,346,968

$160,127

 

0.06%

43.

Liberty Latin America Ltd.

LILA

2,714,854

$52,397

 

0.02%

44.

Johnson & Johnson

JNJ

327,1

$47,714

 

0.01%

45.

Mondelez International Inc.

MDLZ

578

$31,836

 

0.01%

46.

Phillips 66

PSX

227,436

$25,339

-96%

0.01%

47.

Procter & Gamble Co

PG

315,4

$39,393

 

0.01%

48.

Travelers Companies Inc.

TRV

312,379

$42,780

-95%

0.01%

49.

Liberty Latin America Ltd.

LILA

1,284,020

$24,987

 

0.01%

50.

United Parcel Service Inc

UPS

59,4

$6,953

 

0%

51.

Vanguard Index Fds

 

43

$12,719

NEW

0%

52.

Spdr S & P 500 Etf Trust

SPY

39,4

$12,681

NEW

0%

 

It is also important to mention that Berkshire Hathaway owns more than 10% stake in the following companies (American Airlines Group Inc 10.1%, American Express Company 18.7%, Axalta Coating Systems Ltd 10.3%, Bank of America Corp 10.7%, Bank of New York Mellon Corp 10.1%, Davita Inc 30%, Delta airlines 11%, Kraft Heinz Co 26.7%, Liberty Global PLC Class A 10.9%, Liberty Sirius 15%, Moody’s Corporation 13.1%, Verisign, Inc. 11.2%).

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