Warren Buffett's next move may be his biggest and most surprising yet.
The history With a fortune of more than $70 billion and a nearly unparalleled track record of success in business and investing, Buffett is one of the world's few investors to become a household name. However, his company, Berkshire Hathaway , is unfamiliar to most of us.
Continue Reading Below
Now it seems Buffett is doing everything in his power to change that, and this could mean big things for investors.
Even though Berkshire's market capitalization (the total value of its stock) is $364 billion, Berkshire was unranked on Interbrand's ranking of the 100 Best Global Brands.
For comparison, No. 2-ranked Google , which is valued at $348 billion, has a brand value of $107 billion. Nintendo brought up the rear of the report with a brand value of $4.1 billion, indicating that the Berkshire Hathaway brand is worth of less than 1.5% of its market value, versus 30% for Google.
What Buffett is cooking First off, it's important to understand that Berkshire Hathaway isn't simply one company that does one thing. It has a massive portfolio worth nearly $120 billion of investments in public companies. More importantly, Berkshire also owns a collection of businesses outright. These companies, which brought in nearly $7 billion of profit through the first nine months of the year, span across a variety of industries as shown below:
A quick glance at some of the firms owned by Berkshire Hathaway reveals some of the most recognizable names in the country, though these companies rarely boast of falling under the Berkshire Hathaway umbrella:
*Acquired on Nov. 13, 2014. Source: Berkshire Hathaway Annual Report.
But all signs indicate this lack of awareness about the true owner of these companies may soon be changing: In recent years, Buffett and Berkshire have begun rebranding some of the most recognizable businesses to reflect their ownership.
Source: Berkshire Hathaway HomeServices.
For example, following Berkshire's acquisition of 67% of the Prudential and Real Living real estate franchise operations, Buffett noted in his 2012 letter to shareholders, "In the coming years, we will gradually rebrand both our franchisees and the franchise firms we own as Berkshire Hathaway HomeServices."
And in last year's letter to Berkshire shareholders, Buffett said, "If you haven't yet, many of you will soon be seeing our name on 'for sale' signs."
But it doesn't stop with HomeServices. In April we learned that MidAmerican Energy -- which is owned by Berkshire and has 8.4 million customers and $70 billion in assets -- had changed its name to Berkshire Hathaway Energy.
"Our new name reflects the benefits we gain from Berkshire Hathaway's ownership, particularly our ability to reinvest in our businesses and take a long-term view of our customers' needs, which have helped us become a leader in the global energy industry," said Greg Abel, the chairman, president, and CEO of Berkshire Hathaway Energy.
Berkshire also recently acquired Van Tuyl Group, "the nation's largest privately owned auto dealership group." When the move was announced, we also learned the Van Tuyl Group would subsequently be renamed to Berkshire Hathaway Automotive.
And note the subtle difference in the final frame of Helzberg Diamonds' Christmas season commercials from 2013 to 2014:
Source: Helzberg Diamonds YouTube channel.
Although the addition of "A Berkshire Hathaway Company" is hardly noticeable, it should attract the attention of investors everywhere.
The reasonOne of the common themes among all the businesses being rebranded is that they operate in areas where many Americans make their largest single purchases -- a home, a car, a wedding ring, etc.
This is why, when discussing the decision to rebrand HomeServices, Buffett said:
And although your utility bills don't represent a big singular purchase, Berkshire Hathaway Energy generates 60% of its revenue from states that are either fully or partially deregulated, meaning customers can choose which company supplies their electricity or gas.
And if you bought your wedding ring, car, and home from a Berkshire Hathaway company, wouldn't you be more willing to get your electricity from Berkshire, too?
The key takeaway Buffett's love for brands -- particularly See's Candies and Coca-Cola -- has been well-chronicled through the years. When discussing the retirement of longtime See's manager Chuck Huggins in 2005, Buffett said:
Although we are nearly a decade removed from those remarks, Buffett still clearly appreciates the value of a company that treats its customers well, so it's only sensible that Berkshire is aiming to make Americans more aware of who actually owns all these companies.
And the conglomerate's investors should also enjoy the benefits of a more public-facing Berkshire.
The article You Won't Believe What Warren Buffett Is Doing Now originally appeared on Fool.com.
Patrick Morris owns shares of Apple, Berkshire Hathaway, Coca-Cola, and Google (C shares). The Motley Fool recommends American Express, Apple, Berkshire Hathaway, Coca-Cola, Google (A shares), Google (C shares), and Wells Fargo. The Motley Fool owns shares of Apple, Berkshire Hathaway, Google (A shares), Google (C shares), International Business Machines, and Wells Fargo and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
Continue Reading Below