If I'd invested £500 in Berkshire Hathaway shares 5 years ago, here's how much I'd have now! – Motley Fool UK

Dr James Fox explores how successful he would have been if he’d invested £500 in Warren Buffett-led Berkshire Hathaway half a decade ago.
Image source: The Motley Fool
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.
Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) shares have made some long-term investors very rich over the past few decades. It’s an American multinational conglomerate holding company headquartered in Omaha, Nebraska, and managed by the so-called Oracle of Omaha, aka Warren Buffett.
You’ve probably come across Berkshire Hathaway at one point in your life. It’s a holding company for a multitude of businesses and it’s now one of the largest companies in the world, based on market capitalisation.
The firm has existed since 1839, but has only achieved notoriety in recent years. The company has been overseen since 1965 by its chairman and CEO Buffett. Nowadays, Berkshire Hathaway has a market capitalization close to $700bn!
At this point, I also need to note that there are two options for buying Berkshire Hathaway stock: Class A stock (BRK-A) and Class B stock (BRK-B). The main difference is the share price. Class A stock is currently valued at nearly $500,000. Class B is valued at just over $300.
I wasn’t around in 1965. In fact, I’ve been investing for just over a decade. So let’s take a look at how the share price has performed in recent years.
If I had bought £500 of Berkshire Hathaway stock five years ago, I’d be a very happy investor.
Firstly, five years ago, £500 would have got me $665. And in the last five years, Berkshire Hathaway shares have soared 63%. So, today, that $665 would be worth $1,090.
But because the pound as depreciated against the dollar, today, $1,090 is worth around £900. That’s a pretty good return.
But it’s worth remembering that I wouldn’t have received any dividends in that period. Despite being a mature and stable company, Berkshire Hathaway does not pay out dividends to shareholders. Instead, the company chooses to reinvest retained earnings.
Berkshire Hathaway has always looked a tempting investment. Buffett is known for investing in value stocks and focuses on finding companies that are trading at a discount to their intrinsic value.
Buffett searches for a margin of safety of around 30%. If a business doesn’t have a substantial amount of safety between the market price and the equity, he is known to be very hesitant. By applying this safety net, Berkshire Hathaway reduces the risk of losing money — an important characteristic for a holdings company.
So what about the stocks it owns? Well, who am I to question the Berkshire Hathaway portfolio? It is diverse, but Buffett likes to stick with what he knows best. Otherwise it would be hard to assess the intrinsic value of a company.
The company does not invest as frequently as its peers or funds. Instead, it takes long positions on a relatively small number of holdings — 53, in fact.
In short, I would not buy Berkshire Hathaway stock, and for one reason. And that’s the strength of the dollar. I think there are signs the dollar has peaked and the pound could appreciate in the coming years. An appreciating pound could wipe out my gains.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.
James Fox has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
| Mark Rogers
Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…
Read more »
| Christopher Ruane
Our writer takes a look at the long-term outlook for Alphabet stock — and likes what he finds. Here’s why…
Read more »
| Christopher Ruane
With £15 a week to spare, our writer sets out how he would take a long-term approach to building a…
Read more »
| Ben McPoland
Compound interest is so powerful it creates its own snowball effect. Here’s how investing just £10 a day could lead…
Read more »
| Jon Smith
Jon Smith reviews two growth stocks with a large presence in the UK that he thinks could struggle with the…
Read more »
| Christopher Ruane
Our writer explains the steps he would take to try and generate £1,600 in dividends each year by investing £20,000…
Read more »
| Harshil Patel
Our writer shares two recent dividend shares he bought for his ISA. Both are listed on the FTSE 100 and…
Read more »
| Christopher Ruane
Christopher Ruane sets out three Warren Buffett investing principles he follows as he tries to boost his passive income streams…
Read more »
View All
Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.
To make the world Smarter, Happier, And Richer
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show and premium investing services.
Read more about us >

We have taken reasonable steps to ensure that any information provided by The Motley Fool Ltd, is accurate at the time of publishing. Any opinions expressed are the opinions of the authors only. The content provided has not taken into account the particular circumstances of any specific individual or group of individuals and does not constitute personal advice or a personal recommendation. No content should be relied upon as constituting personal advice or a personal recommendation, when making your decisions. If you require any personal advice or recommendations, please speak to an independent qualified financial adviser. No liability is accepted by the author, The Motley Fool Ltd or Richdale Brokers and Financial Services Ltd for any loss or detriment experienced by any individual from any decision, whether consequent to, or in any way related to the content provided by The Motley Fool Ltd; the provision of which is an unregulated activity.
The value of stocks, shares and any dividend income may fall as well as rise and is not guaranteed, so you may get back less than you invested. You should not invest any money you cannot afford to lose, and you should not rely on any dividend income to meet your living expenses. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, administrative costs, withholding taxes and different accounting and reporting standards. They may have other tax implications, and may not provide the same, or any, regulatory protection. Exchange rate charges may adversely affect the value of shares in sterling terms, and you could lose money in sterling even if the stock price rises in the currency of origin. Any performance statistics that do not adjust for exchange rate changes are likely to result in an inaccurate portrayal of real returns for sterling-based investors.
Fool and The Motley Fool are both trading names of The Motley Fool Ltd. The Motley Fool Ltd is an appointed representative of Richdale Brokers & Financial Services Ltd who are authorised and regulated by the Financial Conduct Authority (FCA) (FRN: 422737). We publish information, opinion and commentary about consumer credit products, loans, mortgages, insurance, savings and investment products and services, including those of our affiliate partners.
The Motley Fool Ltd. Registered Office: 5 New Street Square, London EC4A 3TW. | Registered in England & Wales. Company No: 3736872. VAT Number: 188035783.
© 1998 – 2022 The Motley Fool. All rights reserved. The Motley Fool, Fool, and the Fool logo are registered trademarks of The Motley Fool Holdings Inc.


Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *