Buffett’s Takeover Focus Behind Berkshire Surge

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By Jacob Maslow

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Warren Buffett is responsible for Berkshire Hathaway’s stock soaring into 2015. CEO of the company since 1965, Buffett announced in 2014 that the company’s future will rely on buying businesses instead of stocks.

A year later, the company has had its stock price climb as shares have outpaced the S&P 500 by nearly double.

The change came as a shock to many investors. Buffett is known for his innate ability to pick stocks and grow portfolios. For decades, the company has relied on buying stocks to build their portfolio. A vision of the future may have spurred the company’s transition from stock centric to acquisition centric.

It was a promise made to shareholders. Buffett announced that his annual letter, released in February, will outline his vision for the company in the next 50 years.

The transition comes at a vital time for the company. Questions from stockholders put the company’s future in doubt as the 84-year-old CEO will need to step down in the coming years. Buffett’s vision, however, may have been implemented much earlier than discussed.

Berkshire, in 1999, saw 80 percent of its income come from holdings. During the first 3 quarters of 2014, the company’s holdings only accounted for a sixth of the company’s total income.

Berkshire’s stock rose by 27 percent for the year with Class A shares traded at over 220,000.

Companies acquired by the company saw their first nine month earnings soar in 2014. This is a promising trend for the company going into 2015. Many of the acquisitions in 2014 included buying a Canadian electric-transmission company for $2.7 billion dollars.

Other notable acquisitions, many made through stock swaps, include buying a television station and battery maker Duracell.

Berkshire Hathaway, Inc (BRK-A), opened at 221,110 on January 6th and has a 52 week high of 229,374.


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