Posts Tagged ‘Berkshire Hathaway’

Even the Most Respected Investors in the World Make Mistakes

Wednesday, May 4th, 2011

doh-oops.jpeg
(credit: jmv)

You may not have heard yet, but there’s been some interesting drama in the house of the country’s most-worshipped investor – the Oracle of Omaha, Mr. Warren Buffet. One of the top execs at his company (Berkshire Hathaway) seems to have, well, cheated at the game. David Sokol looked like he was next in line to replace Buffet when he eventually retires. But then he pulled a little thing called insider trading.

He bought a bunch of shares in a company, and then convinced Buffet that Berkshire Hathaway should buy that company, which raised the price of the shares and made Sokol a tidy profit. Unfortunately for everyone, that’s illegal. (For the record, Sokol so far denies doing anything wrong.)

There are many ways the company could have handled it – they could have tried to cover it up, or denied the whole thing and given Sokol a big bonus. But to his credit, Berkshire’s famous leader just fessed up. At the company’s annual meeting, where company executives meet with investors, explain their decisions, and take feedback, Buffet basically said that his top aide had done a terrible thing. He also heaped some blame on himself, saying that he wasn’t skeptical enough when Sokol came to him with the proposal.

Now Sokol is out of a job and the company is moving forward. Easy as that. The truth is, bad things happen all the time. But in business as in the rest of life, all it really takes to make things right again is to take responsibility for what happened, fix what you can fix, and move on.

Buffet Invests In American Economy

Monday, November 9th, 2009

Warren Buffet, America’s most well-known investor, has purchased the Burlington Northern Santa Fe Corporation in hopes that railroad traffic will increase in the future.

  • Burlington Northern Santa Fe is a railroad company that ships products by train all over the country.
  • Buffet believes that railroads will become increasingly popular for shipping and transportation as oil becomes more expensive.
  • Buffet’s company, Berkshire Hathaway, followed his rules of investing in this particular deal: invest in companies that people can understand, and buy quality products at discount prices.

Facts & Figures

  • Buffet will pay roughly $26 billion for the 77.4% of Burlington Northern Santa Fe that he does not already own (at $100/ share).
  • Buffet is splitting Berkshire Hathaway’s B Class stock 50 to 1 (meaning that if you owned 1 share of stock before the split, you know own 50!) in order to pay for the acquisition.
  • In an investor owned $1,000 worth of Berkshire stock in 1965, that same investor’s stock would be worth millions of dollars today!

Best Quote

“This all happened because my father didn’t buy me a train set as a kid.” – Warren Buffet, CEO and Chairman of Berkshire Hathaway

Who is Warren Buffet?

Tuesday, October 20th, 2009

Warren Buffet, a.k.a. the “Oracle of Omaha,” has become famous and extremely rich by making very successful investments through his company Berkshire Hathaway, which was a textile firm when he took it over in 1965. Today he owns controlling stakes in insurance companies like GEICO and General Re, utilities like MidAmerican Energy (MDPWK.PK), and food companies like Dairy Queen and See’s Candies, in addition to large stakes in Coca-Cola (KO), Wells Fargo (WFC) and various other companies. In 2008, he was listed as the world’s richest man with more than $60 billion. Berkshire Hathaway’s stock (BRK-A), has the most expensive share price in the world at around $100,000 a share, but lost a bunch of value since 2008, depleting Warren Buffet’s fortune by an astounding $25 billion in just a year. Poor guy only has about $37 billion left with which to scrape by!

Recently however, the famous investor is also a world-class philanthropist, dedicating 85% of his fortune to charity. Most of the money will be going to the Bill and Melinda Gates Foundation, which Bill Gates runs full time having left his job at Microsoft to devote himself to philanthropy. The rest will go to foundations headed by his three kids. He has said that whatever is left of his fortune will go to philanthropy when he dies, if not before. Even if his fortune weren’t to increase in value at all before that time, those $37 billion dollars would be the largest philanthropic contribution in history. Warren Buffet and Bill Gates provide outstanding examples of all the good that can be accomplished when accomplished people dedicate their time and resources to helping others.