Berkshire Hathaway morphs into a holding company powerhouse

Over the two years 1968 and 1969 Berkshire Hathaway liquidated its entire holdings of marketable securities. Happily, Chace was able to report that the company had made a profit on these of more than $5m after tax.

Now remember that it was only in 1965 that BH had a market capitalisation of under $20m, net asset value of $22m and was barely producing profits from its one and only business, so a £5m uplift is quite something.

The gains provided important funds to facilitate the purchase of 97.7% of Illinois National Bank in 1969 which went on to produce terrific returns for the holding company – see Newsletters dated 9th to 11th December 2015. (I’m given to understand that $15.5m was paid, $10m of which was borrowed)

This bank would form another strong pillar on which to build a business empire, alongside National Indemnity which was bought in 1967 for $6.8m (money was taken from the textile operations for this).

The insurance business produced another year of underwriting profit, so Buffett had the float of money at National Indemnity and its partner company, National Fire and Marine Insurance (bought in 1967) available for investment in securities at no cost.

This subsidiary was also branching out:

“Our new surety department, although small, made good progress during the year. We are entering the workmen’s compensation market in California through the establishment of a branch office in……… To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

WHAT IS ADVFN?

ADVFN covers all things stock market.

From the news and opinion pieces on pages like this to share discussion forums, charting tools, financials, live share prices and Level 2, order book data

If you trade or invest ADVFN has the tools you need to make the right decisions.

• 

  101 Ways to Pick Stock Market Winners

  You need the number one bestselling investment guide, the definitive text for day traders, investors and stock pickers.

• 

  The Death of Wealth

  Dissecting the global economy and the financial markets, the book lays out the evidence for the next economic game changer: the Death of Wealth.

• 

  Clem Chambers

• 

  Capital.com

• 

  The OMG Team

• 

  Acenya Capital