Dayanand Menashi's  Instablog

Berkshire Hathaway History - is a series of articles highlighting the progress of the company and how Buffett transformed it from a "Dead textile business" to a thrwaling conglomorate.

First article in this series is - BIRTH OF BERKSHIRE HATHAWAY

In the dawn of 20th century New Bedford, CT was a bustling Textiles town. It had around seventy cotton spinning mills. Hathaway Manufacturing Corporation was one of them. It was founded in 1888 by Horoto Hathaway. New England's success in Textile industry was short lived. It could not compete with the cheap labor of South. At its peak, New England Textile industry employed 30,000 people. But by 1940 the number had dwindled to below 10,000.

As the textile industry declined, its investors ran for safety and consequently diversified into other sectors. But Hathway corp was one bright star that still had the courage to face the headwinds. It was headed by an industry visionary named Seabury Stanton. Stanton was the chip of the old block. He had learnt the ropes of the industry from his father Young Seabury. Other than his Harvard credentials, he possessed strong military experience that had molded him to be a disciplined leader who was not afraid of venturing unchartered waters. His vision was to make Berkshire a state of the art Textile company. Stanton was bold to pour huge amounts of capital in modernizing its mills. The company also pioneered the research of synthetics and reaped its benefit during World-War-II.But as the war ended, the cost competence of Southern states forced the Textile companies of Northern states to mover their operations to southern states.

Hathaway's only chance of survival was to look for a partner who could complement its strengths. Its best bet was Berkshire Fine spinning associates inc. Oliver Chace founded the company in 1806. His descendants continued the family business and by 1950 Malcolm Chace was heading the company. Even though the business had survived for one and a half century, but it faced intense pressure from the southern mills. It did not have a large capital outlay and conserved most of its cash. Berkshire was high tech with large capital outlay, Hathaway operated with minimal capital outlay and conserved most of its cash. They thus complimented each other. In order to maximize each other's strengths they decided to merge in 1955 , thus paving the way for creation of Berkshire Hathaway inc. Malcolm Chace became the Chairman of the company and Stanton became its President. Stanton empowered the new company with his vision of modern technology. But he was short on financial insight. He did not have a clear plan of when the huge investments would pay-off. The decreasing price of Textiles made his job still tough. In 1962 the company incurred a loss of $2.2mn.

Seabury was trying to project his son Jack as the next leader of the company, but he was not looking eye to eye with his brother Otis who controlled the commercial department of the company. Seabury also had some differences of opinion with Malcolm Chace. All this was taking a big toll on the company. Wall street had axed its stock from around $14 ¾ in 1955 to 8 ¾ in 1963.

Link to article
http://www.brkticker.com/brk-chap1.html#chap1.1

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I was researching Dupont (Symbol : DD). I found its diluted EPS was stated as $0.70 in Yahoo Finance , Google finance and MSN. But as per its 10-k report it is stated as $2.20 / share. Please let me know if I am missing something.
Thanks,
D

http://www.sec.gov/Archives/edgar/data/30554/000089322009000276/w72619e10vk.htm#303