Few names in the investing world shine brighter than Warren Buffett, CEO of Berkshire Hathaway (NYSE: BRK.A, BRK.B), a conglomerate that has evolved from a struggling textile firm into a diversified investment colossus, holding a vast range of businesses and stakes in public companies.
But what may astonish investors is the sheer size of the Oracle of Omaha’s ownership stake. Warren Buffett owns an eye-popping 37.3% of Berkshire Hathaway.
How Much Berkshire Hathaway Does Buffett Own?
Holding such a significant chunk of the company he commands is a testament to Buffett’s unshakable faith in the conglomerate he’s built over decades.
This concentration highlights how Buffett’s interests squarely aligns with those shareholders. With 37.3% of his wealth tied to the same basket as retail investors, Buffett’s stake is unmatched by any other insider or institutional investor.
According to the most recent filings, the next largest insider stake is that of Charlie Munger, Berkshire Hathaway’s vice chairman, who owns just around 0.1% of the company.
Likewise, Vanguard Group, the largest institutional investor in Berkshire Hathaway, holds approximately 10.49% of the company’s outstanding shares. Blackrock Fund Advisors own 5.65% while SSgA Funds Management has a 5.20% stake.
This wide gap between how much Buffett owns and the largest institutional owners underscores how uniquely positioned Buffett is in terms of control and financial interest in the company.
Quantifying the Oracle’s Stake
As of the latest data, Buffett holds approximately 218,287 Class A shares of Berkshire Hathaway. Given that Class A shares are trading at about $546,215 each, that’s a staggering total of $119.2 billion, all tied up in Berkshire stock. For perspective, that’s nearly the GDP of Morocco.
This large stake translates to consistent stability for investors. Between 2015 and 2022, Berkshire’s book value per share grew at an average rate of 8.2% annually. Simultaneously, the stock has outperformed the S&P 500 index by an additional 9.9% annually since inception. The correlation between Buffett’s leadership and Berkshire’s stable performance is too glaring to ignore.
Warren Buffett’s ownership stake has seen little dilution over the years, partly due to Berkshire Hathaway’s reluctance to issue new stock. He did acquiesce to price sensitive investors by issuing Class B shares that trade a 1/1,500th the price of the A shares.
The Dividend Dilemma
Interestingly, despite its cash-rich position in which Berkshire holds over $147 billion in cash as of the latest quarterly report, the company does not pay dividends. Buffett has made it clear that he believes reinvesting profits into buying more productive assets is a better use of capital.
Interestingly, while Berkshire Hathaway itself does not pay dividends, many of the stocks in its portfolio do. In fact, in 2023, Berkshire Hathaway received over $6.1 billion in dividend income from its investments.
Major dividend payers in its portfolio include Coca-Cola, which provided over $736 million in annual dividends, and Apple, which contributed over $878 million. This income is another revenue stream that Buffett prefers to reinvest rather than distribute to shareholders.
Is Berkshire a Monopoly?
Buffett’s commanding stake in Berkshire Hathaway also gives him unparalleled control during shareholder meetings. With over 37% of the voting power, it’s nigh impossible for a decision to pass without his consent. This allows Buffett a significant say in the business, far beyond what most CEOs wielding a lesser stake could dream of.
For instance, the acquisition of Precision Castparts for $37.2 billion in 2015 was, in many ways, a one-man show. Buffett saw an opportunity and grabbed it, knowing that he had the clout to push it through. Subsequently, Buffett admitted that he overpaid for the deal.
In recent years, the Securities and Exchange Commission (SEC) has increased scrutiny of large ownership stakes and the potential for antitrust issues. However, Buffett’s majority stake in Berkshire has never come under the SEC’s antitrust radar. This is likely because Berkshire’s holdings are so diversified, ranging from insurance companies to fast-food chains.
The conglomerate owns more than 60 wholly-owned businesses and holds minority stakes in over 40 publicly traded companies, making it more of a reflection of the broader economy than a single, monopolistic entity.
Who Will Take Over Berkshire When Buffett Steps Down?
As Warren Buffett is in his 90s, investors naturally ponder who will take the helm when the Sage of Omaha steps down?
It appears that Greg Abel has been anointed as the heir apparent to Berkshire’s thrown. But whoever does take the helm, none will have the same ownership stake as Buffett and that, in turn, will raise questions about how a less centralized power structure will affect decision-making and, ultimately, performance.
The board at Berkshire has taken measures to prepare for this inevitable transition. In its 2020 annual letter, Buffett mentioned that directors are in agreement that Greg Abel, who currently oversees all non-insurance operations, would take over if anything were to happen to him immediately.
This revealed that the company is not only thinking about succession but has a named successor—a valuable piece of information that provides some assurance to investors regarding the company’s future leadership.
The Bottom Line
Warren Buffett’s 37.3% ownership of Berkshire Hathaway is central to understanding the company’s stability, governance, and investing philosophy. His enormous stake serves as the bedrock of investor confidence, impacting everything from day-to-day operations to long-term strategic acquisitions.
However, it also raises questions about what Berkshire Hathaway will look like when he’s no longer at the helm. For now, investors can rest easy knowing that Buffett’s financial destiny is tightly knit with theirs, and history suggests that’s a very good thing.
From an investment perspective, the book value of Berkshire Hathaway has grown from $19 per share in 1965 to around $500,000 in 2023, representing a CAGR of approximately 19.4%.
It’s hard to find another company with such a long and consistent track record of creating shareholder value. This makes Warren Buffett’s massive stake not just an expression of confidence in his own company, but a beacon for investors looking for long-term, stable growth.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.