The Ultimate Long-Term Value Play: Berkshire Hathaway's Compounding Returns Under Warren Buffett

Investing in Berkshire Hathaway at the dawn of Warren Buffett's stewardship in 1965 stands as one of the most compelling case studies in the power of compounding returns and the discipline of value investing. By examining the company's transformation from a struggling textile business to a global investment powerhouse, we uncover how patience and a long-term horizon can amplify wealth beyond conventional expectations.

The Starting Point: A $19 Share and a $1,000 Investment

In 1965, Berkshire Hathaway's stock traded at approximately $19 per share, a price point that allowed an initial investment of $1,000 to purchase roughly 52 shares. At the time, the company was a faltering textile manufacturer, but Buffett's acquisition marked the beginning of a strategic pivot toward insurance and diversified holdings. By 1970, the stock price had more than doubled to $39 per share, reflecting early confidence in Buffett's vision. This 104% growth over five years laid the groundwork for exponential compounding.

Compounding in Action: From 1965 to 2025

The true magic of Buffett's strategy emerged over decades. A $1,000 investment in 1965 would have grown to an estimated $10.3 million by 2025, assuming reinvestment of dividends and no stock splits. For Class A shares, the returns are even more staggering: a $19 share in 1965 ballooned to $459,800 by 2025, representing a 2,419,900% return. This compounding effect is a testament to Buffett's ability to allocate capital into high-quality, durable businesses, which consistently outperformed market averages.

Navigating Volatility: The Role of Patience

Value investing, as Buffett often emphasizes, requires tolerance for short-term volatility. For instance, between 1966 and 1970, a $10,000 investment appreciated to $18,625, but the 1970s also saw a 54% drop in 1974. Such fluctuations could have tempted investors to sell, yet Buffett's long-term focus allowed Berkshire to recover and thrive. By 2025, the stock's resilience-despite periodic downturns-underscored the importance of holding through market cycles.

Stock Splits and Accessibility: Class B vs. Class A

Berkshire's stock split history further illustrates its commitment to accessibility. While Class A shares (BRK.A) have never split, Class B shares (BRK.B) underwent a 50:1 split in 2010, enabling smaller investors to participate. As of December 2025, BRK.B traded at $502.65, a fraction of Class A's price but still a symbol of sustained growth. This split ensured that even as the company's value soared, it remained within reach for a broader audience.

Conclusion: A Masterclass in Value Investing

Berkshire Hathaway's journey under Warren Buffett exemplifies the ultimate long-term value play. By combining disciplined capital allocation, patience, and a focus on durable businesses, Buffett transformed a $19 share into a multibillion-dollar empire. For investors, the lesson is clear: compounding returns are not merely mathematical phenomena but rewards for those who align with enduring value and resist the urge to chase short-term gains.