When I run across a company I might be interested in as an investment — one that I know next to nothing about — I typically start my investigation by just jumping in and taking a quick look around. And that’s how I’ve designed this “7 Things You Need to Know” series: a quick scan of the facts, in no particular order, that gives you, the potential investor, a mix of high- and low-level takeaways.
1. Berkshire has two share classes
As I write this, the price for a single share of BRK-A is $174,934. Yes, almost $180,000 per share. And those shares are up 1.36% today, or $2,345 per share. The average trading volume for BRK-A shares is 51,242.
As is obvious from that low trading volume, most investors will never buy these shares — which cut you into a larger share of Berkshire Hathaway Inc. (NYSE:BRK.B)’s profits — and will instead buy BRK-B shares, which are going for $116 today, with a more recognizable average trading volume of 3.9 million shares.
2. Berkshire is a “publicly owned investment manager”
What does this mean? When you invest in Berkshire Hathaway Inc. (NYSE:BRK.B), in either share class, you’re buying into the performance of the company’s common stock holdings as well as its wholly owned subsidiaries. These common stock holdings include such corporate stalwarts as American Express Company (NYSE:AXP), The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and Visa Inc (NYSE:V).
The wholly owned subsidiaries famously include GEICO Auto Insurance, NetJets, and See’s Candies. Among other things, earnings generated from these wholly owned companies are used to buy other companies, with which to generate more earnings for Berkshire Hathaway Inc. (NYSE:BRK.B), or to buy more common stock, with the same purpose in mind.
3. Blistering stock performance
Berkshire CEO and COB Warren Buffett isn’t the famous investor he is for nothing. Since BRK-B shares began trading in 1996, total shareholder return is 463.1%. Shares in financials sector investor-darling Bank of America Corp (NYSE:BAC) have been trading since 1986, and have returned 92.72% to investors.
4. Berkshire had a great first quarter
For the first quarter of this year, Berkshire Hathaway Inc. (NYSE:BRK.B) grew its revenue by 15% year over year, and its earnings by 50.8%. Trying to get closer to an apples-to-apples comparison to Berkshire, fellow publicly owned investment manager BlackRock, Inc. (NYSE:BLK) grew its year-over-year first-quarter revenue by 8.9% and its earnings by 10.5%.