The Incredible Growth of a $95 Investment in Berkshire Hathaway

Spoiler: You would be quite pleased with your investment's current value.

Warren Buffett is widely recognized as one of the greatest investors in history. Over a remarkable span of almost 60 years, he has managed to boost the value of shares of his company Berkshire Hathaway (BRK.A 0.32%) (BRK.B 0.13%) by an astonishing average annual rate of 19.8%. In contrast, the S&P 500 index has seen a more modest average annual return of 10.2% during the same period.

Now, let’s imagine what would happen if you had invested approximately $100 in Berkshire Hathaway back in 1965, the year Buffett took control of the then-struggling textile firm. At that time, a single share was priced around $19.

Although Buffett has generally avoided stock splits, he did establish a second class of shares — the B shares, which differ from the original A shares. In this arrangement, 30 class B shares are equivalent to one class A share.

Furthermore, as part of acquiring the Burlington Northern Santa Fe (BNSF) railroad, Berkshire Hathaway executed a 50-to-1 split on those class B shares. As it stands today, one class A share is worth 1,500 class B shares, with class B shares currently trading at around $460 each.

It’s important to note that class A shares have never been split. Therefore, if you had purchased about $100 of those shares back in 1965, you would have owned about five shares, costing approximately $95 in total. Those original, un-split class A shares are now valued at nearly $700,000 each. Yes, that’s the price for just one share! If you still had your five class A shares today, they would be worth nearly $3.5 million! All of this wealth would stem from a single $95 investment made nearly 59 years ago.

If you’re not already a shareholder of Berkshire Hathaway, you still have the opportunity to become one by purchasing class B shares. By doing so, you'll gain a partial ownership in numerous businesses under the Berkshire umbrella, including notable brands like GEICO, Benjamin Moore paints, and See's Candies. In addition, you'll have a portion of Berkshire's equity in its stock portfolio featuring significant stakes in major corporations such as Apple and American Express.

There is a lot to appreciate about Berkshire Hathaway, and its prospects moving forward appear promising, even if its growth rate may not be as rapid as it once was.

Investment, Growth, Berkshire