All About Warren Buffett and Berkshire Hathaway

Warren Buffett has been in the news recently for his thoughts on the economic downturn and government intervention to battle the recession of 2008-2009. His insights are closely followed by consumers and institutional investors alike, and Warren Buffett can single handedly move markets with just a few remarks.

However, many consumers do not fully understand who Warren Buffet is, and how his company Berkshare Hathaway functions. eRollover has come up with a quick guide to one of the most influential investors in history, and a little bit about the most famous value investors in history.

About Warren Buffett

Warren Edward Buffett (born August 30, 1930 in Omaha, Nebraska, United States) is an American investor, businessman, and philanthropist. He is one of the world's most successful investors, the largest shareholder and CEO of Berkshire Hathaway, and is consistently ranked by Forbes as the second richest person in the world after Bill Gates with an estimated net worth of approximately $37.0 billion.

Buffett is often called the "Oracle of Omaha" or the "Sage of Omaha" and is noted for his adherence to the value investing philosophy and for his personal frugality despite his immense wealth.

Buffett is also a notable philanthropist, having pledged to give away 85% of his fortune to the Gates Foundation. He also serves as a member of the board of trustees at Grinnell College.

In 1999, Buffett was named the top money manager of the twentieth century in a survey by the Carson Group, ahead of Peter Lynch and John Templeton, and in 2007, he was listed among Time's 100 Most Influential People in the world.

What is Berkshare Hathaway and How Does it Work?

Berkshire Hathaway (NYSE: BRKA and NYSE: BRKB) is a conglomerate holding company headquartered in Omaha, Nebraska, U.S., that oversees and manages a number of subsidiary companies. Berkshire Hathaway's core business is insurance, including property and casualty insurance, reinsurance and specialty nonstandard insurance. The Company averaged an annual growth in book value of 20.3% to its shareholders for the last 44 years, while employing large amounts of capital, and minimal debt.

Warren Buffett, has focused on long-term investments in publicly quoted stocks, but more recently he has turned to buying whole companies. Berkshire now owns a diverse range of businesses including candy production, retail, home furnishings, encyclopedias, vacuum cleaners, jewelry sales; newspaper publishing; manufacture and distribution of uniforms; manufacture, import and distribution of footwear; as well as several regional electric and gas utilities.

He tends to focus on buying companies for Berkshire Hathaway using a Value Investing approach. Value investing has proven to be a successful investment strategy. There are several ways to evaluate its success. One way is to examine the performance of simple value strategies, such as buying low PE ratio stocks, low price-to-cash-flow ratio stocks, or low price-to-book ratio stocks. Numerous academics have published studies investigating the effects of buying value stocks. These studies have consistently found that value stocks outperform growth stocks and the market as a whole

Warren Buffett is the most prolific investment manager in the world when it comes to this style of investing. Berkshire Hathaway is offered 2 ways, A Shares (Trading at around $94,000 a share, down from an all time high of $150,000), and B Shares (Trading at around $3,000 a share). B Shares were created in 1995, and were a direct result of the general public feeling that they could not afford to invest in the company.