Berkshire Hathaway

 | August 8, 2008 1:18 PM

I have been thinking that since one of the only people who consistently outperforms the S&P 500 is Warren Buffet I should invest in his holdings company.  However the price of a share in his company, BRK.A, is over $100,000.  But then I found out about his class B shares, BRK.B, that are priced to be 1/30th the price of BRK.A.  This USA Today column explains a bit more about these shares and why they think it outperforms other mutual funds.

Berkshire Hathaway is actually a holding company, not a mutual fund, and that makes an enormous difference.

The biggest difference: Buffett and his partner, Charlie Munger, typically own large stakes in the companies they invest in. In many cases, they are directors of those companies, which means they have a hand in running them. Mutual fund managers rarely hold a big enough chunk of any one company to cast deciding votes, and never become directors in companies they own.

That said, Buffett and Munger also have a refreshing view of their jobs. In the Berkshire Hathaway Owner’s Manual, which is available online at www.berkshirehathaway.com, the two lay out their view of Berkshire: “We do not view Berkshire shareholders as faceless members of an ever-shifting crowd, but rather as co-venturers who have entrusted their funds to us for what may well turn out to be the remainder of their lives.”

Also I found out about ShareBuilder where you can buy and sell increments of shares, though I think you have to buy them using an automatic investment plan.  If I join through my ING Direct account, I get $25.  Maybe I should try it?

One Response to “Berkshire Hathaway”

Mark R. wrote a comment on August 8, 2008

8 years ago, i bought a single B class share of BRK which i keep to this day. outside of QCOM options, it was my only attempt at picking stocks, as all the rest of my funds were invested in passively managed indexes. it represented my micro-hedge against the efficient market hypothesis.

still, i think that VTI is pretty much the best thing out there.

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