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Berkshire Hathaway Inc. (BRK.B): Warren Buffett’s Best Investment Ever

Berkshire Hathaway Inc. (NYSE:BRK.A)Berkshire Hathaway Inc. (NYSE:BRK.B) has been a huge winner for its long-term shareholders. Between 1965 and 2012, the per-share book value of Berkshire Hathaway Inc. (NYSE:BRK.B) has grown 586,817% (no, that’s not a typo).

We can chalk a healthy chunk of those outsized returns up to the capital allocation and investing prowess of Berkshire’s CEO, Warren Buffett. Over the years, Buffett has made a lot of impressive investments on behalf of Berkshire shareholders; but is it possible that one investment could be slapped with the superlative “best?”

To find out, I asked five of our Foolish analysts to weigh in.

Dan Dzombak: In two delicious words: See’s Candies.

Berkshire Hathaway Inc. (NYSE:BRK.B) purchased See’s Candies in 1972 for $25 million. For those unfamiliar with the company, See’s is the dominant boxed chocolate company on the West Coast. Buffett has called See’s a “dream business” in that the company is a market leader, has greJat customer loyalty and pricing power, and doesn’t take much invested capital. That means that most, if not all, of the profits flow back to Berkshire.

Financially, See’s Candies has been a great investment — it had returned over 2,000% by 2006. However, I believe See’s Candies is Buffett’s best investment ever because it changed his mind-set from only buying undervalued companies to realizing that it’s okay to pay up for a great business.

As Buffett said in an interview with Fortune last year:

We have made a lot more money out of See’s than shows from the earnings of See’s, just by the fact that it’s educated me, and I’m sure it’s educated Charlie, too.

Buffett has also said it taught him about the power of brands. The education provided by See’s has profited Berkshire Hathaway Inc. (NYSE:BRK.B) immensely over the years, thanks to this interest in great brands. Look no further than Berkshire’s stake in The Coca-Cola Company (NYSE:KO) and GEICO as evidence.

(Dan can be found on Twitter @DanDzombak or on his Facebook page, DanDzombak.)

John Divine: Picking Warren Buffett’s best investment is like being asked to choose the best book ever written — I think we can only choose our favorites.

That said, one investment Buffett made less than two years ago in the wake of the financial crisis shows Buffett at his finest. In September 2011, Berkshire Hathaway invested $5 billion in Bank of America Corp (NYSE:BAC). It wasn’t just an investment, but a vote of confidence in B of A at a time when markets were fretting over the bank’s balance sheet. Not only did the preferred shares Buffett got in return pay a cool $300 million a year in dividends, but when they’re redeemed, Berkshire will get a 5% premium for them.

But here’s the best part: Berkshire Hathaway Inc. (NYSE:BRK.B) also has the right to buy 700 million shares of common stock at about $7.14 a pop — anytime before 2021. At today’s prices, the deal has already netted Berkshire Hathaway Inc. (NYSE:BRK.B) about $3.6 billion on paper, excluding dividends and the redemption premium. The deal shows the absurd level of respect Buffett has earned from his decades of inhuman returns. No longer does his backing merely attract attention to a stock; it actually validates the underlying company.

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