When you have an opportunity to invest with the greatest financial mind in the world , you take it. Warren Buffett, known as the Oracle Of Omaha is the Chairman and CEO of Berkshire Hathaway which is considered by many as the most respected firm in the world. 

Berkshire Hathaway Class B's stock trading history goes back to 1996. The company has generated an average annual compound rate of return of 11.2%. That is an outstanding return if you consider the Standard & Poor's 500's comparable return was just 5.5%.

Berkshire Hathaway stock produced a total return of 76% from 2000-2010 versus a negative 24.1% return for the S&P 500. The company averaged an annual growth in book value of 20.3% to its shareholders for the last 44 years, while employing large amounts of capital, and minimal debt.

The company's primary financial engine is its massive insurance arm which includes Geico and General Re. All of Berkshire’s major insurance subsidiaries are rated AAA by Standard & Poor’s Corporation, the highest Financial Strength Rating assigned by Standard & Poor’s, and are rated A++ (superior) by A.M. Best with respect to their financial condition and operating performance.

The insurance arm generates cash by collecting premiums from policy holders. These premiums are then plowed back into Berkshire Hathaway's other businesses, which include everything from See's Candies to underwear maker Fruit Of The Loom.

In fact, Berkshire now owns a diverse range of businesses including candy production, retail, home furnishings, encyclopedias, vacuum cleaners, jewelry sales; newspaper publishing; manufacture and distribution of uniforms; manufacture, import and distribution of footwear; as well as several regional electric and gas utilities.

Cash from the insurance premiums is also used to create a portfolio of sizeable stakes in several publicly traded companies. For instance, at the end of 2008, Berkshire Hathaway owned 18.4% of The Washington Post, 13% of American Express and 8.9% of Kraft Foods.

Last week, Berkshire Hathaway Class B shares split (Brkb) at a rate of 50 to 1. With the market correction, the shares have just slipped to under $70 per share. The stock performance has been flat during the last twelve months versus a return of 12% in the S and P.

This is the first time in years that the small investor can invest with Buffett since the price after the split brings the stock into a more favorable investment point. Berkshire is in the process of buying Burlington Northern for the long term and last year cut a favorable deal for GE warrants. 

The Oracle Of Omaha has not lost his investing touch. Berkshire Hathaway is a great stock to own for capital gains coming out of a deep recession. It has not moved during the recent stock market rally. We are buying 200 of the Class B Shares - (Brkb) for the Model Growth Portfolio at the stock market open on Monday morning January 25th. 

(Disclosure: Members of eWorldvu own stock in Berkshire Hathaway. Please do your own research and careful due diligence before you invest.)

Update on Monday, January 25, 2010 at 11:26AM by Jim Smith

Bought 200 shares at the market open at 71.48

Update on Wednesday, January 27, 2010 at 08:19AM by Jim Smith

Berkshire Hathaway added to the S and P 500 Index

BY SCOTT PATTERSON - from the Wall Street Journal

Berkshire Hathaway will join the Standard & Poor's 500-stock index, becoming one of the biggest additions to the benchmark index in years.

The iconic company, run by Warren Buffett for 45 years, had been excluded from the index because its high share price meant its shares didn't trade enough to meet the index's standards.

That changed when shareholders approved a 50-1 stock split of its Class B shares last week as part of Berkshire's deal to buy railroad Burlington Northern Santa Fe Corp. last year. Berkshire will replace Burlington Northern in the index.