In 1965, Warren Buffett acquired control of a New England textile business called Berkshire Hathaway for about $10 a share. Today the stock sells for around $134,000 a share and Mr. Buffett is the second richest person in America. The stock has never paid a dividend. How does this amazing success fit the theory that the value of a stock is based on the present value of the expected future stream of dividends? Some corporations chose to reinvest earnings rather than pay out dividends.
Often corporations just starting out chose this method. I think by not paying dividends it gives the corporation more money to invest in other ventures which in turn helps to increase the share value for its shareholders. In the end the shareholder is getting their money all at once instead of through out the year. Visit www.berkshirehathaway.com and get familiar with the company. Tell me what you think the future holds for the company. Warren Buffet has always fascinated me from his success to his argument that he does not pay enough in taxes.
This man has a lot of insight and knowledge as well as willing to take a risk which I think helps to keep him as the 2nd richest man. Berkshire Hathaway inc. is a “holding company” they own or partially own other companies. With stock prices as high as they are and the vast list of subsidies Berkshire Hathaway is invested in I think this company will continue to be successful in the future and be able to weather a storm presented to them. The company quite obviously employees a lot of well knowledgeable investors or they would not be where they are now. Read Mr. Buffett's letters to his shareholders.
This was a very interesting very long letter. In an age of hi-tech why did he recently buy the Burlington Northern Railroad for $44 billion? Warren Buffett joked “This all happened because my father didn’t buy me a train set as a kid” (Merced and Sorkin) Warren Buffetts Company Berkshire Hathaway purchased the railroad because rail moves goods cheaper more efficiently and rail causes less pollution than trucks. Buffett feels “It’s an all-in wager on the economic future of the United States.” He said in a statement “I love these bets” (Zieminski) How will the company fare after his inevitable departure?
This is a tough question; I think that the company will fare okay when Warren Buffett passes on. The reason I feel this way is because Berkshire has been around since the 60’s this company has its hands in a lot of investing pots. The mix they have with American Companies has done them good and Buffett alone did not build Berkshire to where it is today. Granted he was probably a big part of its growth its amazing group of investors have strongly contributed I am sure.