Berkshire Hathaway Cash Position, Positive Cash Flow and Short-term financing

Berkshire Hathaway Inc.

David B. Jones

Financial Management

Richard Gordon

8/10/2020

Berkshire Hathaway Inc. is an American firm that was formed by Chase Oliver in 1839 with the headquarter in Cumberland, Rhode Island in the United States. The organization is a public company with the majority of shares owned by Buffett Warrant. Warren owns 30.7% shares of the company. The company is an employer to over 389,000 individuals across the globe. The company operates in conglomerate industry that allows it to offer a wide range of goods and services to customers across the globe. Some of the products offered by the company include Property insurance, food processing, sporting goods, real estate, media and many others. Berkshire Hathaway Inc. is a public limited company that offers its shares to the public (Langlois, 2020). The key people in the company include Warren Buffett as the CEO and executive chairman, Munger Charles, Greg Abel and Ajit Jain as vice-Chairmen in charge of different departments.

The organization has subsidiaries in different parts of the world that help in meeting the needs of the customers across the globe. The company was listed by Forbes as the eighth largest public firm in the world. Berkshire Hathaway Inc has the most expensive shares in the world ranging between $250,000 and $310,000 per share. The company began as a textile manufacturing company before going into mergers with other firms in different industries to become the famous Berkshire Hathaway Inc. some of the areas where the company has invested include insurance and reinsurance businesses, utilities, retailing, manufacturing, and financial products. Berkshire Hathaway Inc majorly invested in Coca-Cola Company, Apple, American Express and Goldman Sachs. The investments were dome between prior to February 2018. The company has continued to sell and buy share from other firms in a bid to enhance its financial stability in the international market.

Berkshire Hathaway Inc has increased its rate of investment in the recent past. Between 20th and 27th July, 2020, the organization invested over $1.2 billion in Bank of America. Berkshire Hathaway Inc targets firms that are doing well in the market to help in boosting its financial stability. The total holding of the company is over 3.4 billion with the market value of over $244 billion. The organization became active in investment from 1994 and has continued to invest in more firms in the local and international market (Langlois, 2020). The top six companies where Berkshire Hathaway Inc has invested in the last ten year include Apple $111 billion 5.9% stake, Wells Fargo $8.7 billion 8.4% stake, Bank of America $27 billion 11.9% stake, American Express $15 billion 18.8% stake and Coca-cola $19 billion 9.3% stake. The figures show that the organization has used a large percentage of its assets to invest in other firms.

The company is valued at $817 billion, thus ranked as one of the largest firms in the industry and in the world. The capital structure of the firm consists of debt, preference shares and common shares. The debt, preference shares and common shares of Berkshire Hathaway Inc are 499 billion, $.4 billion and $425 billion respectively. The managers of the organization use the three sources of income to generate more investment opportunity for the company. Preferences shares form the least percentage of the capital structure followed by debt while common share takes the largest percentage. The company has succeeded in most of its invested because of the experience of the managers responsible for the investment activities of the company. The competition is becoming stiffer in the industry because of the increased number of firms joining as a result of the huge profits earned by the current companies (CNN, 2020). The products offered by the company are provided by other firms locally and internationally in other industries.

References

CNN. (2020, June 19). Berkshire Hathaway portfolio tracker. Retrieved from https://www.cnbc.com/berkshire-hathaway-portfolio/

Langlois, S. (2020, July 18). Diversify? Almost half of Warren Buffett’s Berkshire Hathaway portfolio is now composed of a single stock. Retrieved from https://www.google.com/amp/s/www.marketwatch.com/amp/story/diversify-almost-half-of-warren-buffetts-berkshire-hathaway-portfolio-is-comprised-of-a-single-stock-2020-07-07