Warren Buffett’s Big Bets Continue To Pay Off

Any list of great CEO’s would not be complete without Warren Buffett. Buffett is the head of Berkshire Hathaway and the namesake for this blog. Berkshire Hathaway is the holding company for Geico, Dairy Queen, Nebraska Furniture Mart, Burlington Northern, and a number of subsidiaries.

The Oracle of Omaha is still one of the greatest investors around. With so many pundits claiming the demise of Buffett’s investment prowess; Buffett just continues to make shrewd investments. How about his investment in Goldman Sachs (GS) when the investment bank was desperate for capital? His $5 billion dollar investment looks pretty smart now even with Goldman’s government problems. How about his $3 billion dollar stake in General Electric (GE) during the financial crisis? While the warrants are still underwater, the 10% dividend on preferred shares has paid off nicely.

His company, Berkshire Hathaway (BRK.A) has made millionaires out of many investors over the past 25 years. Shares have skyrocketed from $7,100 in 1990 to over $118,280 in 2010. The stock has performed well in recent years also. Berkshire Hathaway has returned 98.12% to shareholders over the past decade. Buffett’s shareholder meetings are legendary with investors trekking to Nebraska annually to hear the financial wisdom of Buffett. While insurance companies like AIG needed government bailouts to stay afloat; Berkshire Hathaway has not needed one dime from the government. This is because Buffett has managed to properly manage risk. The firm has made some poor bets on derivatives in the past but did not allow these bets to jeopardize the underlying businesses.

This outstanding performance comes at a cheap price. The world’s third richest man is arguably the most underpaid CEO of any major company. Buffett takes home just $100,000 annually in salary. Buffett’s salary has been the same for the past 25 years. His total compensation comes in at just over half a million a year with over $300,000 being spent on personal security to protect Buffett. Buffett is generous with both his time and money. He has pledged to donate 85% of his wealth to charitable causes and shares his insights with young investors.

I do own shares of Berkshire Hathaway Class B stock.

Photo by: Ethan Bloch