Moreover, he (Buffett) views himself as a fiduciary for thousands of investors, and in that role, he believes paying dividends isn't the best use of Berkshire's cash: "I do not think a dividend would be a plus in terms of getting the share price up to [fair] value -- in fact, it might be quite the opposite."
Known as the Oracle of Omaha, Buffett holds more than 20% of Berkshire Hathaway, which owns a majority of more than 70 firms in all and has stakes in more than a dozen others.
Berkshire combines the qualities of stock ownership with the qualities of a mutual fund. Like a mutual fund, Berkshire is a diversified group of publicly traded companies researched, purchased and managed by the chairman. Like a mutual fund, an investor gets a low-cost basket of stocks along with the world's greatest investor with one purchase.
According to a letter from Mr. Buffett (chairman of Berkshire Hathaway) to the Gates Foundation, Mr. Buffett will convert the bulk of his Class A shares into 10 million Class B shares that will be earmarked for the foundation. Starting in July 2006, he will give away 5 percent of the balance of those shares for the rest of his life. Should he die before all the shares are distributed, the foundation will receive the remaining shares.
Berkshire’s insurance underwriting operations are consisted of the sub-groups, including GEICO and its subsidiaries, General Re and its subsidiaries, Berkshire Hathaway Reinsurance Group and Berkshire Hathaway Primary Group. GEICO insurance subsidiaries include Government Employees Insurance Company, GEICO General Insurance Company, GEICO Indemnity Company and GEICO Casualty Company. These companies primarily offers private passenger automobile insurance to individuals in all 50 states and the District of Columbia.
Berkshire’s operating businesses are managed on an unusually decentralized basis. There are essentially no centralized or integrated business functions (such as sales, marketing, purchasing, legal or human resources) and there is minimal involvement by Berkshire’s corporate headquarters in the day-to-day business activities of the operating businesses. Berkshire’s corporate office senior management participates in and is ultimately responsible for significant capital allocation decisions, investment activities and the selection of the Chief Executive to head each of the operating businesses. It also is responsible for establishing and monitoring Berkshire’s corporate governance efforts, including, but not limited to, communicating the appropriate “tone at the top” messages to its employees and associates, monitoring governance efforts, including those at the operating businesses, and participating in the resolution of governance-related issues as needed.
Berkshire's separate financial statements are appended to its annual reports, printed on a different color paper, and carry the legends: "These statements do not conform to GAAP in all respects. These statements are unaudited."
A share of Berkshire Hathaway stock could have been bought for $18 on May 10, 1965, the day Warren Buffet took control of the company (Lowenstein 1995). That share could have been sold for $71,000 on December 31, 2000. The annualized return on Berkshire Hathaway's stock during the period was 26.18 percent, more than double the 11.69 percent of the S&P 500 index.
In the late 1960s, Buffett ventured into the insurance business and purchased two Nebraska companies, National Indemnity and National Fire and Marine Insurance. This first investment in the insurance industry gave rise to the super legend of today. In 1996, Buffett acquired GEICO General Insurance Company and the GEICO gecko soon became a national icon.
Berkshire Hathaway's shareholder meeting has morphed into an entire weekend. It starts on Friday evening with a cocktail reception and ends on Sunday with brunch and a private shopping day at an elegant Omaha jewelry store, Borsheims.