Berkshire Hathaway is a holding company that owns businesses in a vast range of industries, including insurance, property, clothing, meat products, flight services, home furnishing, news media, confectionery, beverages and carpet making.
A holding company, or a parent corporation, is a legal business organization that owns and controls a number of separate businesses – often in completely different markets – without uniting them into one unified company. It is typically a limited liability company that buys shares and owns enough stock in other companies to have control over their operation, but not being actively involved in daily business operations.
The strengths that Berkshire Hathaway possesses provide the firm with a wonderful foundation on which to build. Specifically:
- Portfolio of quality businesses. An unmatched collection of businesses, most of them now enjoying favorable economic prospects.
- Skilled and loyal managers. A cadre of outstanding managers who, with few exceptions, are unusually devoted to both the subsidiary they operate and to Berkshire.
- Strong financials. An extraordinary diversity of earnings, premier financial strength and oceans of liquidity that we will maintain under all circumstances.
- Opportunity to constantly invest. A first-choice ranking among many owners and managers who are contemplating sale of their businesses.
- Unique corporate culture. A culture that is distinctive in many ways from that of most large companies that we have worked 50 years to develop and that is now rock-solid.
Many large conglomerates such as Berkshire Hathaway sit on a massive pile of cash. As of November 24, 2021, Berkshire Hathaway has USD$149,000,000,000 in cash on its Balance Sheet which is the largest cash holding in the company’s history. So, interest earnings can be an important revenue source for very large cash-rich businesses.
Charlie Munger said that there are only three ways a smart person can go broke: liquor, ladies and leverage. That is why Berkshire operates with its own money. Because it is a much better way of doing it that to be forced to sell, or to deal with investment banker, investment consultants, venture capitalists.
All in all, the point of getting rich is that you do not have to get along with other people.
