Warren Buffett would not have been able to build Berkshire Hathaway into the corporate giant it is today without the use of leverage. Leverage has been vital to the company’s success, although not in the traditional sense. While Berkshire does borrow money, the sums borrowed are insignificant compared to the leverage achieved within the insurance division. Leverage to boost returns According to one study, Berkshire has leveraged its capital on average by 60% by effectively borrowing from its insurance customers. Berkshire’s insurance and reinsurance operations provide more than a third of its funding. These businesses take insurance premiums upfront and…
How Buffett Has Used Leverage To Outperform
Sign up now and get our in-depth FREE e-books on famous investors like Klarman, Dalio, Schloss, Munger Rupert is a committed value investor and regularly writes and invests following the principles set out by Benjamin Graham. He is the editor and co-owner of Hidden Value Stocks, a quarterly investment newsletter aimed at institutional investors. Rupert owns shares in Berkshire Hathaway. Rupert holds qualifications from the Chartered Institute For Securities & Investment and the CFA Society of the UK. Rupert covers everything value investing for ValueWalk