Berkshire Hathaway
Definition
Berkshire Hathaway is a multinational conglomerate holding company led by Warren Buffett. It owns a diverse range of businesses and holds significant equity stakes in numerous public companies.
5 Must Know Facts For Your Next Test
- Berkshire Hathaway's stock is one of the most expensive stocks traded, often surpassing $400,000 per share for its Class A shares.
- The company does not pay dividends; instead, it reinvests profits into new investments and acquisitions.
- Warren Buffett is known for his value investing philosophy, which involves buying undervalued stocks with strong fundamentals.
- Berkshire Hathaway's portfolio includes major holdings in companies such as Apple, Coca-Cola, and American Express.
- The company's diversified model helps mitigate risks associated with any single sector or industry.
Review Questions
- Why does Berkshire Hathaway choose not to pay dividends to its shareholders?
- What investment philosophy is Warren Buffett known for, and how does it influence Berkshire Hathaway’s stock valuation?
- Name at least two major companies in which Berkshire Hathaway holds significant equity stakes.
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Related terms
Dividend Discount Model (DDM): A method used to value a stock by using predicted dividends and discounting them back to present value.
Value Investing: An investment strategy where stocks are selected that trade for less than their intrinsic values.
Conglomerate: A large corporation that owns businesses in different industries.
