Berkshire Hathaway (Textile Operations)
Company Overview
Berkshire Hathaway Inc. is the holding company through which Warren Buffett has allocated capital for six decades, transforming a failing New England textile company acquired in 1965 into one of the most valuable corporations in the world. Berkshire owns subsidiary businesses outright across insurance, rail, energy, manufacturing, retail, and services, while maintaining a large portfolio of publicly traded equities. Its unique structure — permanent ownership, minimal headquarters overhead, decentralized management — has become a model in capital allocation studied worldwide.
Investment Story
1965: Takeover from Seabury Stanton. Buffett began buying Berkshire Hathaway shares in 1962 as a cigar-butt statistical value investment. When CEO Seabury Stanton sent a tender offer at $11.375 (less than the $11.50 verbally agreed), Buffett — angry at what he considered a deliberate slight — bought control of the company instead and fired Stanton. He has since called this decision driven by personal pique his worst business decision ever.
1967: The insurance pivot. The purchase of National Indemnity and National Fire & Marine for $8.6 million introduced Buffett to insurance float economics and marked the real beginning of Berkshire's transformation from a failing textile company to a diversified capital allocation vehicle.
1985: Textile operations closed. After 20 years trying to make the textile business viable, Berkshire closed its last textile facilities, freeing capital for far better-returning alternatives.
1985–2010: Building the operating earnings base. See's Candies, Nebraska Furniture Mart, GEICO, General Re, BNSF, and dozens of other acquisitions built Berkshire's operating earnings from negligible amounts to over $15 billion annually.
2010–present: Elephant hunting at scale. BNSF ($34B), Precision Castparts ($37B), and Berkshire Hathaway Energy's continued multi-billion expansion marked Berkshire's era of deploying tens of billions in single transactions.
Buffett's Own Words
Letters # 1965 Buffett Letter to Shareholders > 📌 Note: In 1965, Berkshire Hathaway's annual report did not include a formal shareholder letter in Buffett's later style. > Warren Buffett was primarily running the Buffett Partnership during this period. > > See also: 1965 Buffett Partnership Letter --- Source: Berkshire Hathaway Inc. — Annual Report 1965
Letters # 1966 Buffett Letter to Shareholders > 📌 Note: In 1966, Berkshire Hathaway's annual report did not include a formal shareholder letter in Buffett's later style. > Warren Buffett was primarily running the Buffett Partnership during this period. > > See also: 1966 Buffett Partnership Letter --- Source: Berkshire Hathaway Inc. — Annual Report 1966
Letters # 1967 Buffett Letter to Shareholders > 📌 Note: In 1967, Berkshire Hathaway's annual report did not include a formal shareholder letter in Buffett's later style. > Warren Buffett was primarily running the Buffett Partnership during this period. > > See also: 1967 Buffett Partnership Letter --- Source: Berkshire Hathaway Inc. — Annual Report 1967
Letters # 1968 Buffett Letter to Shareholders > 📌 Note: In 1968, Berkshire Hathaway's annual report did not include a formal shareholder letter in Buffett's later style. > Warren Buffett was primarily running the Buffett Partnership during this period. > > See also: 1968 Buffett Partnership Letter --- Source: Berkshire Hathaway Inc. — Annual Report 1968
*Letters # 1969 Buffett Letter to Shareholders To the Shareholders of Berkshire Hathaway Inc.: the stock of The Illinois National Bank and Trust Co. of Rockford, Illinois. This bank had been built by Eugene Abegg, without addition of outside capital, from $250,000 of net worth and $400,000 of deposits in 1931 to $17 million of net worth and $100 million of deposits in 1969. Mr. Abegg has continued as Chairman and produced record operating earnings (before security losses) of approximately $2 million in 1969. *
Investment Lessons
The origin mistake created the vehicle. Buffett's worst business decision — buying control of Berkshire out of personal anger — paradoxically created the vehicle for his greatest achievements. What followed transformed a $22/share failing textile company into a $400,000/share capital compounding machine. The quality of subsequent decisions mattered more than the quality of the founding decision.
Scale creates its own constraints and advantages. Berkshire's size ($600B+ assets) eliminates most investment opportunities available to individual investors but provides access to unique situations — crisis capital at exceptional terms, family business acquisitions at any scale, infrastructure investments requiring permanent patient capital. The size disadvantage in finding ideas is offset by the access advantages it creates.
Permanent capital enables superior long-term allocation. Berkshire's structure — no requirement to return capital, no quarterly earnings pressure, no redemptions — allows holding periods and investment criteria impossible for institutional investors with defined mandates.