Powerhouse Companies - Explained
A beginner-friendly explanation of Powerhouse Companies in value investing.
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Powerhouse Companies Explained
Berkshire's five to six major wholly-owned operating businesses that generate billions in pre-tax earnings and form the core of Berkshire's non-insurance operations.
What It Means for Investors
The Powerhouse Five (2013)
| Company | Acquisition | Pre-Tax Earnings | CEO |
|---|---|---|---|
| BNSF | 2009 ($26.5B) | ~$3B+ | Matt Rose/Carl Ice |
| MidAmerican/BHE | 2000 (76%+) | ~$2B+ | Greg Abel |
| Iscar/IMC | 2006 ($4B) | ~$1B+ | Jacob Harpaz |
| Lubrizol | 2011 ($4B) | ~$1B+ | James Hambrick |
| Marmon | 2008 ($4.5B) | ~$1B+ | Frank Ptak/John Nichols |
Combined pre-tax earnings: $10.8 billion (2013)
The Powerhouse Six (2014+)
With the addition of Precision Castparts:
| Company | Added | Pre-Tax Earnings |
|---|---|---|
| Precision Castparts | 2016 ($32B) | ~$2B+ |
Combined: $12B+ in pre-tax earnings from six businesses.
Key Takeaway
Berkshire's five to six major wholly-owned operating businesses that generate billions in pre-tax earnings and form the core of Berkshire's non-insurance operations.