Chapter 2. 1965–2009: Lessons from Significant Events in Berkshire History

History is philosophy teaching by examples.

Thucydides, an ancient Greek historian

When Warren Buffett took control of Berkshire Hathaway in 1965, it was a small textile manufacturing company in New England. The prospects of the textile industry at the time were rather bleak. Buffett has transformed Berkshire into a large insurance, utility, manufacturing, and retailing conglomerate. In 44 years, the company's book value has grown from $19 to $70,530 per class A share, and the stock price has correspondingly grown from about $8 to $96,600. The following list of significant events in Berkshire history serves two purposes. First, it is important to learn from the examples others have set; and second, it presents a quick look at many of Buffett's principles. In later chapters, we will explore these principles further.

1965: Not Throwing Good Money after Bad

Event Warren Buffett is listed as a Berkshire director for the first time, although he is not yet the chief executive of the company. Starting to accumulate Berkshire shares in 1962 at $7.60 per share, Buffett acquired a controlling interest in the company by 1965 with an overall average cost of $14.86 per share.

Lesson Revenues at Berkshire have been declining, from $64 million to $49 million, in the prior 16 years. However, the company did not invest much to prop up the declining textile business. The decision not to invest in a declining business is a good ...

Get Buffett Beyond Value: Why Warren Buffett Looks to Growth and Management When Investing now with the O’Reilly learning platform.

O’Reilly members experience live online training, plus books, videos, and digital content from nearly 200 publishers.