If you ever invested in the sharemarket you’d know who Warren Buffet is, and the irony of someone who has grown so wealthy is that he was utterly unlike the characters portrayed in the movie, Wall Street.

Berkshire Hathaway and Warren Buffett are exceptional not just because of the scale of their financial windfall, but the culture that has formed around them. Buffett’s shareholder letters have, for decades, been a source of wisdom and laughs. Charlie Munger’s thoughts have been compiled in Poor Charlie’s Almanack and sold many copies. And most important in the Berkshire culture is the annual shareholder meeting in Omaha. The first, in 1973, was held in a cafeteria at the National Indemnity Company. Today, tens of thousands descend on the city.

And at the annual meeting the other day, Buffet finally decided to retire as CEO, leaving at the end of this year. The “culture” he created had several unusual things about it, aside from those meetings where he (at the age of 94) and others answer each and every question – often not about the company – from the floor, for hours.

First, Berkshire Hathaway has never split its stock:

[T]oday, the stock of Berkshire Hathaway [BH], the same entity that once made textiles and which Buffett was prepared to sell at $11.50 per share (but not $11.375) sits at over $800,000, by far the priciest in the world. Companies rarely allow their share price to rise above $1,000; Berkshire’s board anti-split policy is meant to promote long-term ownership and ward off speculators, and so the Class A shares are well on their way to $1 million. (In 1996, Berkshire issued Class B shares, with substantially diluted voting power, to allow small investors to participate.)

The BH stock price has declined in only 11 years out of 60.

It has also only ever paid a dividend once, 10 cents per share in 1967, and Buffet vowed never to do that again, ploughing all profits straight back into investments.

Its investment policy has been to buy stocks of non-flashy companies that everyday Americans use, to buy cheap and then to hold onto them. As a result BH has owned stock in GEICO Insurance, American Express and the Coca-Cola Company for decades. BH’s principal businesses are insurance, railroads, energy, and retail. Pretty boring, no? But it does have some unusual (and unrelated) businesses in its portfolio:

Buffett bought See’s Candies, the California chocolate shop, for $25 million in 1972. See’s has raised prices every year since joining Berkshire, yielding $2 billion in profits, and counting … Berkshire owns NetJets, the private jet fractional ownership and leasing company, and Forest River, a manufacturer of recreational vehicles. It owns Dairy Queen, the Nebraska Furniture Mart, Helzberg Diamonds, Benjamin Moore & Co., Brooks running shoes, and Duracell batteries, among others.
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What they have in common, and why Berkshire owns them, are excellent profit margins and excellent management.

It also means that BH pretty much missed the “Tech” boom of the last twenty years – but they have made up for that in recent times, even if it meant violating the “cheap buy” part of the business:

His admitted lack of understanding of technology businesses meant that he generally stayed away from them. He had the opportunity to invest in Amazon and Microsoft in the 1990s, and didn’t. Buffett quips that he wasn’t smart enough to invest in Microsoft,
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[But] in 2016, Berkshire began buying Apple stock, eventually owning six percent of the company, for which Buffett paid $12 billion….At the time Berkshire started buying Apple, Apple was the most valuable company in the world. It was not exactly a bargain to buy six percent of that company—and that’s just the point. Charlie Munger had advised Warren Buffett to “buy wonderful businesses at fair prices.” And hold on to them for a very long time….That investment has yielded a capital gain of nearly $150 billion.

Now he’s retired and the question is how long BH can continue as it has? Will those investment philosophies hold? They probably will through the next generation of executives, given that they’ve been picked by Buffet and his partner Munger and worked for years in the culture. But that’s been seen before in countless companies that owed their success to the initiative, attitudes and drive of their CEO founders – and then began to fade slowly as that generation moved on.

Still, I wouldn’t bet against BH in my lifetime and Buffett has also often said, “Never bet against America”, of which BH is very much a successful part.