How To Buy Berkshire Hathaway Shares In Australia

How To Buy Berkshire Hathaway Shares In Australia

Berkshire Hathaway is a multinational conglomerate holding company based in the United States. It was founded in 1839 by Oliver Chace as a textile manufacturing company.

However, in 1965, it was acquired by Warren Buffett, who turned it into an investment holding company.

For many investors, they want to know how to buy Berkshire Hathaway in Australia. Berkshire Hathaway Shares like all stocks can be purchased by investors living in Australia.

Berkshire Hathaway stocks can be purchased using Australian brokerage accounts which allow international share purchasing.

Warren Buffett and Berkshire Hathaway

Understanding Berkshire Hathaway means understanding Warren Buffett, one of the most successful, influential, and respected investors of the 20th century. Hailing from Omaha, Nebraska, he is often referred to as the “Oracle of Omaha.”

Warren Buffett, along with Berkshire Hathaway’s late Vice Chairman Charlie Munger, are known for their long-term investment approach and focus on understanding a company’s intrinsic value.

Under Buffett’s guidance, Berkshire Hathaway has adopted a strategy of acquiring companies with strong fundamentals and sustainable competitive advantages, resulting in its transformation into a diverse conglomerate.

Berkshire Hathaway boasts a diverse range of subsidiaries operating in multiple industries. These industries encompass insurance, utilities, energy, manufacturing, retail, and railroads

Among the notable subsidiaries within the Berkshire Hathaway family are GEICO, a renowned auto insurance provider; BNSF Railway, a leading freight railroad company; Dairy Queen, a popular fast-food chain; Duracell, a prominent battery manufacturer; and Clayton Homes, a trusted name in manufactured housing.

These subsidiaries, along with others, contribute to the wide-ranging business portfolio of Berkshire Hathaway.

Warren Buffett’s discreet acquisition of 23 million shares of Coca-Cola stock in 1988 is a testament to Berkshire Hathaway’s commitment to identifying and investing in companies with enduring value and long-term growth potential.

This strategic move exemplifies Buffett’s investment philosophy and contributes to the success of Berkshire Hathaway.

Furthermore, Warren Buffett’s fondness for Cherry Coke is well-known. In 1986, he declared it the official drink of Berkshire Hathaway’s annual shareholder meeting, showcasing his personal preference and sense of humor within the company.

For a deeper understanding of Warren Buffett’s investment mindset, “The Warren Buffett Way, 3rd Edition” offers valuable insights into the strategies and thinking of this extraordinary investor.

How To Buy Berkshire Hathaway Shares In Australia

How To Buy Shares In Berkshire Hathaway (BRK-A & BRK-B)

To purchase shares in Berkshire Hathaway (BRK-A & BRK-B), you’ll need to open a brokerage account that offers international trading of stocks, ETFs, bonds, and mutual funds.

One share of Berkshire Hathaway Class A (BRK-A) is currently priced at approximately $517,407.53.

For investors looking for a more affordable option, Berkshire Hathaway Class B (BRK-B) shares are available at around $341.09 per share.

Today’s modern brokerage accounts offer the convenience of trading across markets and countries at reduced fees.

Choosing the right brokerage account can be overwhelming due to the abundance of options available. Here are some key factors to consider:n

Transaction Fees: Brokers generate revenue through transaction fees associated with buying and selling shares on the stock exchange. It’s important to note that trading fees apply to most market orders.

Therefore, it’s advisable to approach share investing as a long-term opportunity, considering that stock prices can experience significant fluctuations within short periods.

Forex Exchange Fees: Buying Berkshire Hathaway shares may involve converting your local currency into US dollars, which may result in additional costs known as foreign exchange fees.

While brokers may not explicitly advertise these fees, they could still be applicable.

Monthly Fees: Some brokers charge a fixed monthly fee, typically associated with extensive information and features beyond the needs of an average investor.

Not all platforms follow a subscription-based model, so it’s important to consider whether such additional services are necessary for you.

Website and App Functionality: Each broker provides its own website and app with varying levels of functionality.

Some platforms offer basic interfaces, while others provide detailed share charts and market information. Your choice may depend on your preferences and requirements regarding the availability of these features.

Trade Options: Brokers operate in different markets, which affects the types of trades you can make. Fees and trade minimums may vary depending on the specific market. Trade minimums represent the minimum dollar value required for each trade.

Access to Live Market Data and Research: Certain brokerage platforms offer live market data, including current price movements, buy and sell volumes, and historical trading data.

Additional research tools may also be available on some platforms, while others may not provide these features.

Order Types: Brokers provide various options for order types when buying and selling. These options include specifying the quantity of shares or the desired dollar value for the purchase.

You can choose from options like “limit price,” “at market,” or “conditional order.” Some platforms may also offer expiry options such as “good till cancelled,” “day only,” or a specific date. By considering these factors, you can make an informed decision when selecting a brokerage account to purchase Berkshire Hathaway stocks.

Considerations for Buying Berkshire Hathaway Shares in Australia

Investing in US stocks from Australia follows a similar process to buying Australian-listed shares but requires consideration of important distinctions due to the companies being headquartered in another country.

Since these shares are “domiciled” outside Australia, additional tax implications should be taken into account. Notably, US stocks do not provide franking credits because they are not subject to Australia’s dividend imputation system, which aims to avoid double taxation.

Investing in the US market requires completing the necessary paperwork, including the W8BEN Form.

This form is mandated by the US government for non-US residents who wish to invest. Australian investors can benefit from the special tax arrangement between Australia and the United States by correctly filling out the W8BEN form.

Failure to submit the form would result in a 30% tax on shares sold and a 30% withholding tax on dividends. However, completing the W8BEN form accurately reduces the American tax component to 15%.

It is crucial to ensure the proper and timely completion of this document. Seeking investment or financial advice, as needed, is highly recommended to successfully navigate this process.

Berkshire Hathaway Share Price

Had you invested $1,000 in Berkshire Hathaway:

If you had invested $1,000 in Berkshire Hathaway back in 1965 when Warren Buffett took control, the shares were valued at approximately $19.

With that amount, you would have been able to purchase around 52 shares.

Fast forward to today, the Class A shares (BRK-A) of Berkshire Hathaway are trading at $517,407.53 each. If you had held onto those shares, your initial $1,000 investment would have grown to a staggering $26,905,191.56. That’s an impressive return on investment!

Since its humble beginnings in the textile industry, Berkshire Hathaway has come a long way. The company’s share price has shown steady growth over the past five years, with a 5-year performance of 72.83%.

In comparison, the S&P 500 index has risen by 60.80% during the same period. As of the year-to-date (YTD) performance, Berkshire Hathaway has achieved a solid growth rate of 10.20%. However, it lags behind the S&P 500, which has seen a YTD growth of 17.82% in 2023.

Berkshire Hathway stock price growth since 2000

Warren Buffett and Intrinsic Value

Warren Buffett is renowned for his adherence to a principle of investing in businesses he comprehends fully, and as a result, he has avoided certain sectors such as technology stocks.

He has achieved consistent returns by sticking to his principles of value investing and focusing on businesses with strong fundamentals and enduring competitive advantages.

This approach may be of the reasons why Berkshire Hathaway’s YTD growth has been slightly lower than that of the S&P 500.

In 2023, the S&P 500 experienced significant growth driven by companies such as Tesla, Microsoft, Netflix, Google, Amazon, Apple, and NVIDIA with an average combined growth of 88.86%! with an average combined growth of 88.86%!

Notably, NVIDIA and Tesla have recorded remarkable growth rates of 217.63% and 160.30%, respectively.

Summary

The story of Warren Buffett and Berkshire Hathaway is truly captivating and extraordinary. The consistent growth achieved by Buffett and his ability to outperform the market serves as a remarkable example.

While Berkshire Hathaway may not have experienced the meteoric rise of today’s technology stocks, it remains a source of stability for investors, grounded in sound business logic and principles.

Investors looking to purchase Berkshire Hathaway stock in 2023 could do much worse!

This article does not serve as an endorsement or recommendation for the purchase of Berkshire Hathaway shares, or any other products mentioned in the article.

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